Paliperidone is being developed as a new therapeutic agent for the treatment of schizophrenia. The extended-release (ER) formulation of paliperidone was developed to deliver paliperidone at a relatively constant rate over a 24-hour period to improve the tolerability profile and decrease the potential for orthostatic hypotension. This study is designed to evaluate the efficacy, safety and tolerability of 2 fixed dosages of paliperidone ER compared with placebo in adult patients with schizophrenia. This is a multicenter, double-blind (neither the patient nor the physician will know if placebo or drug is being given and at what dose), randomized (patients will be assigned to different treatment groups based solely on chance), placebo- and active-controlled, parallel-group, dose-response study. Patients will be randomized into 1 of 4 treatment groups to receive oral dosages of paliperidone ER 6 mg or 12 mg, olanzapine 10 mg, or placebo once daily for a 6-week period. The study includes a screening period of up to 5 days, followed by 6-week double-blind treatment phase. Following the double-blind treatment phase, eligible patients (those who have completed the 6-week double-blind phase or who discontinue due to lack of efficacy after a minimum of 21 days) may enter a 52-week open-label extension phase with paliperidone ER monotherapy. While patients are hospitalized, efficacy will be assessed twice during the first week and at the end of the second week, and after patients are discharged from the hospital, they will return to have efficacy and safety assessments performed on a weekly basis through the end of the 6-week double-blind phase. Efficacy will be evaluated throughout the 6-week double-blind phase by completion of the Positive and Negative Syndrome Scale (PANSS), Clinical Global Impression Scale - Severity (CGI-S), Personal and Social Performance Scale (PSP), Schizophrenia Quality of Life Scale, Revision 4 (SQLS-R4), and Sleep Visual Analog Scale (VAS). The efficacy response will be measured by the change from baseline score to end of double-blind phase for PANSS, PSP, CGI-S, SQLS-R4, and Sleep VAS. Safety will be monitored throughout the study and includes assessments of the incidence of adverse events; measurement of extrapyramidal symptoms using 3 rating scales (Abnormal Involuntary Movement Scale [AIMS], Barnes Akathisia Rating Scale [BARS], Simpson-Angus Rating Scale [SAS]); measurement of vital signs (laying down and standing blood pressure, pulse, temperature); electrocardiograms; and clinical laboratory tests. Double-blind: 6 mg or 12 mg fixed dose of paliperidone ER, olanzapine 10 mg or matching placebo taken orally once daily for 6 weeks.