Nine children who were psychotic or had very severe character disorders were placed individually in carefully selected foster homes. The children received psychiatric treatment and casework was done with both foster parents and biological parents. It was necessary to treat the biological parents to help them to create a stable hierarchy of adults surrounding the child. The agency learned that if this is not done psychotherapy of the child fails. This technique was effective for these children and presented many advantages over residential treatment, for a foster home has a normal family atmosphere and a hospital does not; foster care avoids both the trauma of long-time hospitalization and the rehabilitation required after it.