In this multi-faceted exploratory study, administrative data were used to examine trends in residential care utilization by the Illinois Department of Children and Family Services (DCFS) and youth outcomes from 1993 to 2003. Multivariate analyses were conducted to determine the factors associated with entry to residential care and discharge/post-discharge placement outcomes. We examined case records and conducted interviews with key informants to understand the decisions-making processes surrounding placement in residential care. This study found that statewide utilization of residential care declined sharply between 1995 and 2003 and that residential care is now used primarily as the placement of last resort--only after youth have experienced multiple failed placements or have been placed in locked settings. It showed that as residential care utilization declined, the composition of youth in residential care changed. On average, analysis revealed that residential care programs now serve more troubled youth than in previous years. Almost 60 percent of youth who entered residential care in 2002 experienced negative discharge outcomes. Many youth who left residential care for foster care or potentially permanent family settings eventually returned to higher levels of care and youth who experienced more placements prior to entering residential care were more likely to have negative discharge and post-discharge outcomes. Boys were at higher risk than girls of entering residential care and of experiencing negative residential care discharge and post-discharge outcomes. The findings highlight the need to improve supportive and therapeutic services at multiple points in time: when children first enter foster care, during residential care, and after discharge from residential care.