BACKGROUND Children reared in institutions experience elevated rates of psychiatric disorders. Inability to form a secure attachment relationship to a primary caregiver is posited to be a central mechanism in this association. We determined whether the ameliorative effect of a foster care (FC) intervention on internalizing disorders in previously institutionalized children was explained by the development of secure attachment among children placed in FC. Second we evaluated the role of lack of attachment in an institutionalized sample on the etiology of internalizing disorders within the context of a randomized trial. METHODS A sample of 136 children (aged 6-30 months) residing in institutions was recruited in Bucharest, Romania. Children were randomized to FC (n = 68) or to care as usual (CAU; n = 68). Foster parents were recruited, trained, and overseen by the investigative team. Attachment security at 42 months was assessed using the Strange Situation Procedure, and internalizing disorders at 54 months were assessed using the Preschool Age Psychiatric Assessment. RESULTS Girls in FC had fewer internalizing disorders than girls in CAU (OR = 0.17, p = .006). The intervention had no effect on internalizing disorders in boys (OR = 0.47, p = .150). At 42 months, girls in FC were more likely to have secure attachment than girls in CAU (OR = 12.5, p < .001), but no difference was observed in boys (OR = 2.0, p = .205). Greater attachment security predicted lower rates of internalizing disorders in both sexes. Development of attachment security fully mediated intervention effects on internalizing disorders in girls. CONCLUSIONS Placement into FC facilitated the development of secure attachment and prevented the onset of internalizing disorders in institutionalized girls. The differential effects of FC on attachment security in boys and girls explained gender differences in the intervention effects on psychopathology. Findings provide evidence for the critical role of disrupted attachment in the etiology of internalizing disorders in children exposed to institutionalization.