Atypical antipsychotics interfere with central and peripheral neurotransmitter systems and with hormonal production. In this study we compared the effect of olanzapine and risperidone on hormonal state and sexual function (by using the Questionnaire for Sexual Dysfunction, QSD) in 40 patients with a first episode psychosis. Results were compared to those of 34 healthy controls. Patients using risperidone had significant higher prolactin levels than patients using olanzapine. Patients using olanzapine had significantly higher 17beta-estradiol levels than patients using risperidone. Overall satisfaction with sexuality was less in patients compared to controls, but not different between patients using olanzapine and those using risperidone. Problems with sexual arousal were significantly higher in patients using olanzapine compared to patients using risperidone. A significantly higher frequency of problems with ejaculation and problems with insensibility of genitals were found in patients compared to healthy controls. We found no relation between medication, prolactin and 17beta-estradiol levels, frequency of sexual activity, overall satisfaction with sexuality and any of the 18 sexual dysfunctions we investigated. Our results suggests that sexual dysfunction in patients with first episode psychosis might occur despite normal prolactin levels. Also, sexual dysfunction is highly prevalent in healthy controls. Awareness should be raised of potential sexual problems in young adults.