The present review sought to address the following questions: What evidence is there that long-term, family-based out-of-home care (OOHC) has a general, population-wide effect on children’s mental health such that it is generally reparative or generally harmful? Does entry into long-term OOHC affect children’s mental health, as evidenced by prospective changes over the first years in care? And, is the reparative potential of long-term, family-based OOHC moderated by children’s age at entry into care? Fourteen studies were identified for review. We found no consistent evidence that family-based OOHC exerts a general, population-wide effect on the mental health of children in care; or that entry into care has an initial effect on children’s mental health; or that children’s age at entry into care moderates their subsequent mental health trajectories. Instead, several longitudinal studies have found that sizable proportions of children in care manifest meaningful improvement in their mental health over both short- and long-term time frames and that similarly sizable proportions experience meaningful deterioration in their mental health. Rather than asking whether long-term, family-based care is generally reparative or harmful for the development of previously maltreated children, future investigations should instead focus on identifying the systemic and interpersonal characteristics of care that promote and sustain children’s psychological development throughout childhood—and those characteristics that are developmentally harmful (i.e., for which children is the experience of care beneficial, and for which children is it not?). The review concludes with recommendations for the design of improved cohort studies that can address these questions.