Abstract Risk and protective factors of psychosocial development in children in different residential care settings need to be further studied internationally, in order to develop working methods for social and health care services. Standardized methods of the CBCL, TRF, and CGAS, were used to evaluate psychosocial functioning of children in childrens homes in Finland. Further, data on sociodemographic situations and traumatic events in their lives were assembled. The percentage of behavioural and emotional problems within clinical or borderline range in the different ratings was 5580%. Combined traumatization, sexual abuse, school difficulties, male sex, older age (11 years) and older age at first and on-going placement (7 years), as well as difficulties in relationships with parents are likely to be associated with more severe behaviour problems and lower general functioning. The results of this study show that children and adolescents in social service residential settings are a highly vulnerable group and that these children have extensive mental health needs.