• The aim of this study was to determine the effectiveness of foster care preparation and placement. Five hundred seventytwo patients from five hospitals were randomly assigned to foster care preparation (experimentals) or continued hospitalization (controls). They were studied before assignment, at placement of experimental subjects, and four months later regarding social functioning, mood, activity, and overall adjustment. Hospitals averaged two months preparing experimental subjects, resulting in 73% placed in foster care. Little change was observed between referral and placement. However, four months after placement, experimental subjects were significantly improved over controls, particularly in social functioning and adjustment. After four months, 88% of the foster care subjects were in the community. Findings suggest that attention should be given to selection criteria, that lengthy preparation may be unnecessary, and that foster care is superior to hospitalization for patients who cannot return to their own homes.