Research has shown that children placed in foster care fall below population norms on many indicators of well-being. Yet few studies have been designed to distill the effects of foster care from conditions that precede foster care. Based on the available evidence, it is also uncertain whether the purported effects of foster care are lasting. This study used data gathered prospectively from an economically disadvantaged, urban cohort to examine whether foster care is associated with decreased educational and economic attainments as well as increased criminality in adulthood. Individuals who were placed in foster care after an indicated allegation of maltreatment were compared to three naturally occurring groups: (a) maltreatment victims who did not reside in foster care, (b) individuals without an indicated maltreatment allegation who were raised in a household with a Child Protective Services (CPS) record, and (c) individuals without an individual or household record of CPS involvement. Using multiple estimation procedures, we found that all participants with a CPS record fared worse in adulthood than their peers without a CPS record. Despite their poor outcomes, foster children functioned as well as other CPS recipients who did not reside in foster care. Our findings indicate that caution is warranted when attributing dysfunction observed in foster children to the effects of foster care. Implications for prevention and intervention within the context of child welfare are discussed.