Previous research has shown that children receiving substitute parental care tend to have high rates of emotional/behavioural disturbance, but uncertainty remains on the extent to which this derives from genetic risk, adverse experiences before receiving substitute care, or from risks associated with substitute care experiences. In order to examine the effects of institutional rearing (as a specific form of substitute care), two groups of primary school children reared in substitute care from before the age of 12 months were compared: 19 children in residential group (institutional) care and 19 in continuous stable foster family care (matched for age and gender). The two groups were similar in coming from biological families with high rates of psychopathology and social malfunctioning, but differed with respect to pattern of rearing. Both groups were compared with classroom controls, using teacher questionnaires, systematic classroom observations, and standardised cognitive testing. Parental questionnaires were also obtained for the two substitute care groups. As found previously, the combined substitute care groups differed from controls in showing a high level of hyperactivity/inattention. The observational measures showed a similar effect, indicating that the elevated rate was not attributable to rater bias. The teacher questionnaire and observational measures showed, however, that the increased level of hyperactivity/inattention was substantially higher in the institutional group than the foster family group. Parental questionnaire ratings showed the same contrast between the groups, except that the main difference was on unsociability and emotional disturbance rather than hyperactivity/inattention. It is concluded that, against a background of genetic and early environmental risk, institutional rearing predisposes to a pattern of hyperactivity/inattention.