Forty-one children reared in group care were compared with 41 age- and sex-matched family care children according to interview, questionnaire, and observation measures of behavioural and scholastic functioning. Individual differences in outcome within the group care sample were examined in relation to a range of possible risk/protective indicators. The strongest predictor of outcome proved to be the reason for admission into residential care, with the implication that the outcome was best for children who had experienced stable, harmonious family relationships in their early years. The risk and protective effects applied to both the children's behaviour and scholastic attainments but, although the two were intercorrelated, neither accounted for the other. All subgroups of children in institutional care failed to show a lack of confiding peer relationships, with the pattern of findings suggesting that this stemmed from some aspect of experiences (possibly involving peer relationships) during residential care, as well as from discontinuity in caregiving during the early years.