Clozapine is effective for treating positive symptoms in approximately two-thirds of the 30% of patients with schizophrenia whose psychosis is minimally responsive to typical or atypical antipsychotic drugs at ordinary doses. The dose range at which clozapine is effective in treatment-resistant patients is 2-3 times higher than that needed in non-treatment-resistant patients. The onset of efficacy in these patients may not be until 3-6 months after initiating treatment. There are no established means of augmenting the efficacy of clozapine in treatment-resistant patients, but electroconvulsive therapy has empirically been found to be effective in those whose psychotic symptoms persist despite an adequate trial of clozapine monotherapy. Optimal treatment with clozapine requires attention to psychosocial needs and rehabilitation of patients whose work and social function is usually impaired due to cognitive dysfunction and persistent psychosis. No other antipsychotic drug has been robustly shown to be as effective as clozapine for this group of patients. In addition, clozapine is indicated for patients with schizophrenia who are intolerant to other antipsychotic drugs or, due to its unique antisuicidal effect, those who are at high risk for suicide. Clozapine can also improve some domains of social and cognitive function, leading to marked improvement in overall function and quality of life. Although clozapine causes agranulocytosis significantly more frequently than other antipsychotic drugs, with required hematological monitoring of the white count, its occurrence has been reduced to < 0.5% and associated mortality is now extremely rare. While clozapine also causes weight gain and other metabolic side effects, myocarditis, tachycardia, hypersalivation, and seizures, its advantages in treating positive symptoms, suicide risk, and cognitive and social function, lead to a positive benefit-to-risk ratio that make it an invaluable addition to the armamentarium for treating treatment-resistant schizophrenia.