Presented is an overview of issues and concepts related to deinstitutionalization and the development of community based services for the mentally retarded. Explained are distinctions between mental retardation and developmental disabilities, and between decentralization, deinstitutionalization and institutional reform. Forces in the deinstitutionalization movement are analyzed, including normalization and legal action. Resistance by parents and economic interests are said to be among barriers to deinstitutionalization. Elements of a comprehensive service system, including adherence to a developmental model are considered, and comprehensive system services such as family support and child development services are described. Given are examples of deinstitutionalization efforts in Connecticut, Nebraska and California. Approaches to deinstitutionalization in rural areas receive special consideration. (CL)