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Objective: Excessive use of antipsychotic medication by older people is an international concern, but there is limited comparative information on their use in different residential settings. This paper describes and compares antipsychotic prescribing to older people in care homes and the community in England and Wales. Method: Analysis of a primary care database (THIN) with 403 259 community and 10 387 care home residents aged 65–104 years in 2008–9. Results: 3677 (0.9%) patients in the community and 2173 (20.9%) in care homes (20.5% in residential homes, 21.7% in nursing homes) received an antipsychotic medication prescription in the last 90 days. Most patients had received prescriptions for more than three months and 60% of prescriptions were for atypical antipsychotics. In patients without severe mental illness, 2367 (0.6%) patients in the community and 1765 (18.2%) in care homes received antipsychotic medication; such prescribing was common for patients with recorded dementia (30.2% in care home, 10.1% in the community). In care homes, younger age and living in the North of England predicted prescribing, but care home type did not. In the community, female gender, increasing age, living in a deprived area and the North predicted prescribing. Conclusions: Despite safety concerns, antipsychotic prescribing is markedly higher in care homes than in the community, and strongly associated with dementia in both settings. In England and Wales, we estimate that 54 000 older care home patients and 50 000 community patients receive antipsychotic medication without a diagnosis of severe mental illness with important implications for health and social services. Copyright # 2010 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]