The authors previously demonstrated, in a controlled study of psychiatric patients randomly assigned to foster care or continued hospitalization, that foster care produced better social adjustment within four months. From that study, this article examines characteristics of foster homes associated with improvement in social functioning. Improved outcome was related to more children in the homes, fewer boarders, and smaller size. Stimulation in the environment, more supervision by foster care sponsors, and more intensive follow-up by social work staff was bad for schizophrenic patients but good for nonschizophrenic patients. They conclude that size and composition of homes are important and attention needs to be given to finding an enriched environment that is neither too stimulating nor too sterile for schizophrenic patients (authors).