Findings from the case studies suggest that large-scale outcome evaluations of residential treatment settings are feasible and have the potential to identify strengths and weaknesses within specific residential treatment sites, patterns of treatment progress, and trends over time. The authors note that community treatment services need to be expanded before the demand for residential treatment services can be reduced. Treatment outcome research can inform residential treatment decisions on many levels from the individual level to State policy. The need for outcome evaluations of residential treatment program came to light after the Illinois Department of Children and Family Services (IDCFS) spent millions of dollars on long-term residential treatment for the more than 50,000 children in State custody. Following concerns about this residential care, a clinical needs assessment was conducted with 333 youths who were in State custody and were randomly selected from 17 randomly selected residential treatment settings. It was found that the majority of children in residential treatment could be better served in community-based care. Two other case examples are presented that illustrate the value and feasibility of measuring outcomes in residential treatment settings; one example involves the tracking of clinical outcomes of State-funded residential treatment while the other example describes the Residential Treatment Outcomes System (RTOS) developed by the IDCFS to assess residential treatment outcomes. Figure, references