Background: We assess individual differences in the caregiving environments of young children being raised in institutions in Romania in relation to developmental characteristics such as physical growth, cognitive development, emotional expression, and problem and competence behaviors. Method: Videotaped observations of the child and favorite caregiver in their "home" environment were coded for caregiving quality, and this was related to child characteristics. Child emotional reactivity was assessed during responses to interactional tasks. Cognitive development was assessed from child responses to the Bayley Scales of Infant Development. Data regarding problem behaviors and competence were obtained from caregiver report. Children reared in institutions were compared on all of these measures to never institutionalized children to assist gauging degree of impairment. Results: Children raised in institutions demonstrated marked delays in cognitive development, poorer physical growth, and marked deficits in competence. Individual differences in caregiving environment were associated with cognitive development, competence, and negative behavior among these young children being reared in institutions. Conclusions: These data confirm previous findings regarding deficits associated with institutional care and extend our understanding of the impact of individual differences in caregiving quality on the development of young children in institutions.