In a study of the level, complexity, and initiations of play behavior in 15 handicapped segregated, 15 handicapped mainstreamed, and 15 nonhandicapped mainstreamed preschoolers, Ss were observed during free play. Play levels, according to hierarchies of M. Parten and J. Piaget, as well as the play initiator were recorded every 3 minutes for 90 minutes. Groups differed in their use of onlooking, solitary and parallel play, total play complexity, and adult initiation of behavior. Handicapped segregated Ss performed more poorly than either the handicapped mainstreamed or the nonhandicapped Ss on each variable. There was no difference in the performance of the two mainstreamed groups. Findings were taken as supportive of the principle of least restrictive environment in P.L. 94-142, the Education for All Handicapped Children Act. (Author)