Antipsychotic medications are recommended for schizophrenia spectrum disorders, yet their long-term effects on functional recovery remain unclear, with conflicting evidence often derived from between-subject comparisons vulnerable to confounding by indication.

We conducted a nationwide register-based cohort study of 65,630 individuals with incident schizophrenia spectrum disorders in Denmark (1998–2023). We modeled antipsychotic exposure against ‘productive engagement’ (employment or education). We used two analytical approaches: (1) within-subject stratified Cox models with time-varying covariates to eliminate time-invariant confounding; and (2) Fine–Gray competing risks models with baseline exposure, accounting for mortality and emigration.

Over 26.9 million person-weeks, the overall productive engagement rate was 48.2%. Integration of hospital pharmacy data revealed 6.1% exposure misclassification in studies relying solely on community records. The primary within-subject analysis revealed significant temporal heterogeneity: medication use was associated with reduced engagement rates in the acute (0–2 years; HR = 0.908) and consolidation phases (2–5 years; HR = 0.946), but reversed to a small positive association in the maintenance phase (5+ years; HR = 1.019). The between-subject Fine–Gray model, which estimates cumulative engagement probabilities, yielded an SHR of 1.002 (95% CI = 0.988–1.015), a population-level average that obscured these phase-specific dynamics.

Antipsychotic pharmacotherapy exerts a time-dependent, biphasic impact on vocational recovery. We identified a window of vulnerability during the post-acute ‘consolidation’ phase (years 2–5) where treatment is associated with a transient reduction in productive engagement, before becoming protective after 5 years. These findings challenge the assumption that symptomatic stability automatically facilitates functional reintegration.