More than one-third of Medicaid programs and Medicare Part D plans use prior authorization (PA) policies to control the use of atypical antipsychotics (AAs). We used Medicaid and Medicare claims data to investigate how Maine's PA policy affected AA use, treatment discontinuities, and spending among schizophrenia patients initiating AA therapy. Patients initiating AAs during Maine's policy experienced a 29 percent greater risk of treatment discontinuity than patients initiating AAs before the policy took effect; no change occurred in a comparison state. AA spending was slightly lower in both states. Observed increases in treatment discontinuities without cost savings suggest that AAs should be exempt from PA for patients with severe mental illnesses.