In a randomized controlled trial, we compared abandoned children reared in institutions to abandoned children placed in institutions but then moved to foster care. Young children living in institutions were randomly assigned to continued institutional care or to placement in foster care, and their cognitive development was tracked through 54 months of age. The cognitive outcome of children who remained in the institution was markedly below that of never-institutionalized children and children taken out of the institution and placed into foster care. The improved cognitive outcomes we observed at 42 and 54 months were most marked for the youngest children placed in foster care. These results point to the negative sequelae of early institutionalization, suggest a possible sensitive period in cognitive development, and underscore the advantages of family placements for young abandoned children.