This study examined the applicability of Watts' Human Interaction Scale to day care settings, and was also concerned at a more general level with the question of whether it is possible for day care settings to approximate good homes. Six 2-year-olds in each of two day care centers were each videotaped for a total of 45 minutes in a variety of behavioral settings. Results indicated that: (1) the scale can be used in group settings with the addition of a distinction between adult/individual interaction and adult/group interaction; (2) interaction involving activities and interaction techniques which Watts found associated with high competence development occurs most frequently in structured activities and to some extent in free play settings. Also discussed: other results involving differences in the two day care centers; the adult/group mode of interaction; behavior setting sampling; adult responsiveness; adult/child ratios; quality versus quantity of interaction; and assessment of the direct impact of day care environments on the development of competence. It is concluded that day care can provide experiences comparable to good homes. (MS)