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Objective: This study tested the impression that there have been significant shifts in the relative diagnostic frequencies of schizophrenia and major affective disorders. Method: Data on discharge diagnoses from 1972 to 1988 were gathered from six North American psychiatric teaching hospitals (data from one extended through 1991), and rates for schizophrenia and major mood disorders were evaluated. Results: Total annual discharges increased by 6.6% during the study period. Large reciprocal shifts in the frequencies of diagnoses of schizophrenia and major affective disorders were found; schizoaffective disorder was a minor diagnosis. Beginning in the early 1970s, a gradual increase in the frequency of diagnoses of major affective disorders at all sites was accompanied by a corresponding decrease in diagnoses of schizophrenia at five of the six centers. Schizophrenia diagnoses decreased from a peak of 27% in 1976 to 9% in 1989 (a threefold decrease), and diagnoses of major affective disorders rose from a low of 10% in 1972 to 44% in 1990 (a fourfold increase). Conclusions: Several forces may have influenced these changes. 1) DSM-III narrowed the definition of schizophrenia and broadened the category of major affective disorders. 2) Treatment-oriented diagnostic bias associated with the availability of lithium and other mood-altering agents may have encouraged consideration of affective disorders. 3) Economic and social forces, including better third-party reimbursement rates, may have favored affective diagnoses. 4) True increases in the incidence of affective disorders may have occurred. 5) Although a real decrease in new cases of schizophrenia may have occurred, this effect was probably minor and dominated by a larger shift of such diagnoses to affective categories.