Introduction Sexual dysfunction is a frequent side effect of antipsychotic treatment. Increased prolactin levels are believed to be responsible for this sexual impairment despite contradictory results. Aim The primary objective of the present study was to examine the relationship between sexual dysfunction, subjective well-being and prolactin levels in patients with schizophrenia treated either with risperidone or quetiapine. The secondary objective was to explore the relationship between testosterone and the severity of positive and negative symptoms of schizophrenia in male patients. Methods In a 4-week nonrandomized open label observational study, 102 inpatients with schizophrenia were recruited. Sexual functioning, subjective well-being and endocrinological parameters were assessed as well as psychopathological characteristics. Main Outcome Measures Two self-rating questionnaires concerned with sexual functioning (“Essener Fragebogen zur Sexualität”) and Subjective Well-Being Under Neuroleptic Treatment Scale (SWN) were completed by the patients. Plasma levels of prolactin in male and female patients were measured. Furthermore, in male patients testosterone, luteinizing hormone (LH) and follicle-stimulating hormone (FSH) were determined. Positive and Negative Symptom Scale (PANSS) was applied. Results After 4 weeks, patients treated with quetiapine reported less severe sexual impairment, as well as lower PANSS negative and general score compared with patients treated with risperidone. Additionally, emotional regulation as measured with the SWN was higher in patients treated with quetiapine. Risperidone was significantly associated with elevated prolactin levels. Prolactin levels were not correlated either with sexual dysfunction or PANSS. However, in the group of patients treated risperidone, sexual impairment was significantly associated with the SWN subscale emotional regulation. Conclusions Increased prolactin levels do not seem to be decisive for antipsychotic induced sexual dysfunction. Improvement of severity of illness and regaining the ability to regulate one's own emotion have positive influence on sexual functioning.