Over the last 20 years, we have learned much about the extent to which early-life deprivation affects the mental health of children and adolescents. This body of evidence comes predominantly from studies of children raised in institutional care. The Bucharest Early Intervention Project (BEIP) is the only randomized controlled trial designed to evaluate whether the transition to family-based foster care early in development can ameliorate the long-term impact of institutional deprivation on psychopathology during vulnerable developmental windows such as adolescence. In this review, we detail the extent to which early deprivation affects mental health during this period, the capacity of family-based care to facilitate recovery from early deprivation, and the mechanisms underpinning these effects spanning social–emotional, cognitive, stress, and neurobiological domains. We end by discussing the implications and directions for the BEIP and other studies of youth raised in institutions.