Background: The disability policy in Taiwan has traditionally emphasized residential care in large institutions and, more recently, medium-sized group homes. This paper compares the relative costs, services provided and outcomes between the traditional institutions, medium-sized group homes and new small-scale community living units that were launched in 2004 in Taiwan. Materials and Methods: Cross-sectional analysis was used to investigate the three current residential service models. A total of 248 participants with intellectual disabilities were interviewed, including all residents from the existing 25 small residential units and purposively sampled respondents from the other two residential models. Results: Outcomes for the Taiwanese participants were consistent with the existing literature on deinstitutionalization from Western societies. Small homes provided better subjective and objective quality of life than both medium-sized community-based units and traditional institutions. Conclusion: Participants living in small residential homes experienced better outcomes at lower cost than persons living in medium-sized group homes or institutions.