Children raised in institutions, considered an extreme example of social deprivation, are one group through which we can better understand the impact of neglect on child health and development. The Bucharest Early Intervention Project (BEIP) is the first randomized, controlled trial of foster care as an intervention for institutionalized children. In this review we describe the mental health outcomes from the BEIP. Specifically, we report findings on attachment styles, attachment disorders, emotional reactivity, and psychiatric symptomatology for children in the BEIP. We describe the impact of the foster care intervention on these outcomes and also describe how outcomes differ by gender and by length of time spent in the institution. In addition, we explore the influence of genetic variation on individual outcomes and recovery from early severe social deprivation, as well as the role of differences in brain development in mediating later psychiatric morbidity. The results from the BEIP confirm and extend the previous findings on the negative sequelae of early institutional care on mental health. The results also underscore the benefit of early family placement for children living in institutions.