The purpose of this article was to review studies of behavioral development and household and community activity among adults with mental retardation living in community residential services and to distill knowledge about the factors that influence outcome. Research points to behavioral development occurring across the full spectrum of disability but influenced by mental retardation syndrome and the acquisition of pivotal skills. However, engagement in household and community activities has been found to be strongly related to individual adaptive behavior. People with more severe mental retardation are vulnerable to leading lives characterized by underoccupation and lack of community involvement. Moving from institutional to community-based residential services may be accompanied by significant increases in adaptive behavior, but a plateau effect on subsequent development has also been reported. There is substantial evidence to suggest that key aspects of effective teaching technology may be absent in community-based residential environments. Community settings support greater engagement in household and community activities than institutions. Ordinary housing stock and normative architecture and standards of material enrichment are to be preferred. The use of normative housing constrains group living to relatively small scale, but there is little evidence that smaller size within this range is to be preferred to larger size. There is little evidence to suggest that higher staff-to-resident ratios lead to uniformly better outcomes, but staff orientation, working methods, and performance are important influences. Little is known about what precise characteristics of community location give rise to greater community integration.