This paper reviews research reported in the last 10 years on the effects of day care on children and their families. The review is organized around the following areas: attachment and emotional development; psycho-social development; intellectual and cognitive development; health and nutritional effects; the effect of caregiver stability; the effect of day care on later school functioning; and characteristics related to sex-typing. In general, research indicates that high quality day care appears to have little harmful effect on the attachment relationship between mother and child. Although some studies have found higher scores on positive social skills in home-reared children, most evidence indicates that day care has a positive effect on social development and adjustment to new environments. The research also suggests that social behavior may be significantly related to the developmental age of the child. In the intellectual domain, little positive or negative effect can be attributed to day care. With disadvantaged children, however, day care attendance appears to offset decline in test scores. No strong conclusions can be drawn from the limited research in other areas with the exception that quality day care appears to be related to caregiver stability, staff/child ratio, and level of staff education and related experience. (Author/MP)