Therapeutic residential care (TRC) is becoming an increasingly relevant out-of-home care option for children and young people with multiple and complex needs. It is a new and developing approach in Australia, one aimed not simply at containment of the ‘hard cases’ – as is often the case in traditional residential care – but rather at actively facilitating healing and recovery from the effects of abuse, neglect and separation from family. In this Issues Paper, therapeutic residential care is described and contrasted with other models of out-of-home care. The theory and evidence supporting the use of this form of care are examined and used to develop a set of key elements, which, it is argued, should guide the provision of therapeutic residential care in Australia.