While community care for mentally handicapped adults has been received enthusiastically, there have been few attempts to evaluate this form of care. This paper reports a study of two hostels for mentally handicapped adults. By employing an experimental research design, it aimed to test the hypothesis that small, community based residences provide an environment in which individuals can acquire the skills necessary for independent living. Using Gunzberg's Progress Assessment Charts as an indicator, the residents of one hostel achieved significant improvements in the areas of self-help, communication, socialization and occupation over the year following admission. A group of matched controls living at home showed no such improvements, and a group of matched controls living in hospital showed a less certain and less dramatic improvement. A small group of people living in a second hostel also showed significant gains in social competence. The paper also discusses problems in the design and implementation of experimental studies in this field.