Objectives Half of the claims for antipsychotics used in nursing homes are for off-label indications, raising concerns about its potential misuse. This study examines the associations between antipsychotic drug utilization in US nursing homes and facility characteristics including financial resources, staff proficiency and operational efficiency controlling for resident's demographic characteristics, cognitive impairment, and functional status. Methods Data were derived from Long Term Care Focus and Nursing Home Compare databases. Multivariate regression models are performed to test for significant associations. All analyses are conducted using STATA. Key findings Study sample contains 11339 nursing facilities, 2857 with residents with schizophrenia/bipolar disorder (group I) and 8482 without the diagnosis (group II). The prevalence of schizophrenia/bipolar disorder in 2008 was 16.0%; antipsychotic use was 33.6% and 21.1% in groups I and II, respectively. Antipsychotic utilization is positively associated with Medicaid as primary payer (P < 0.001), facility for- profit status (P < 0.01), and availability of Alzheimer special care unit (P < 0.001), whereas it is negatively associated with number of registered nurses in the facility (P < 0.001), hours of direct care to residents (P < 0.001), and admissions per facility bed (P < 0.001). Antipsychotic use is also negatively associated with residents' cognitive impairment, and nursing home admission from a hospital (P < 0.001). Conclusions Nursing home for- profit status, payment source, staff proficiency, residents' cognitive impairment, and hospital admission are associated with antipsychotic use in residents without a diagnosis of schizophrenia/ bipolar disorder. Policies to address the safety concerns associated with antipsychotics misuse in elderly nursing home residents are needed.