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Aim: We examined the effect of individualized occupational therapy (IOT) compared to the usual group occupational therapy (GOT) on the rehospitalization of patients with schizophrenia. Methods: A prospective cohort study included patients with schizophrenia who were discharged within 1 year from a psychiatric hospital. Time to rehospitalization by treatment group (GOT + IOT or GOT‐alone) was evaluated with Kaplan–Meier survival analysis. The impact of demographics and clinical factors associated with rehospitalization was investigated using Cox proportional hazards models. Results: Of the 111 patients who met the criteria, 54 were in the GOT + IOT group and 57 in the GOT‐alone group. Over the 2 years from discharge, the overall rehospitalization rate was 51.376% (56 patients); the GOT + IOT group demonstrated a significantly lower rehospitalization rate with 16 patients rehospitalized compared to 40 patients from the GOT‐alone group. Time to rehospitalization was significantly longer for the GOT + IOT group compared to those in the GOT‐alone group (P < 0.001). The multivariate Cox proportional hazards models showed that type of occupational therapy (hazard ratio [HR] = 0.543), medication adherence (HR = 0.343), access to resident support persons (HR = 0.450), and executive function at discharge (HR = 0.740) were all significantly associated with rehospitalization. Conclusion: Our results provide support for the prolonging effects of IOT in relation to rehospitalization and the reduction of rehospitalization risk compared to patients with schizophrenia who receive GOT alone, in addition to supporting good cognition at discharge and favorable medication adherence. [ABSTRACT FROM AUTHOR]