Background: Psychotropic medication use in community residential care (CRC) facilities has been reported to be similar to that found in nursing homes before the implementation of the Omnibus Budget Reconciliation Act of 1987. Objectives: The objectives of this study were to (1) describe patterns of psychotropic medication use at baseline and after 1 year of follow-up in adult residents aged ≥65 years supported by Medicaid in CRC facilities, (2) describe the quality of psychotropic use, and (3) examine the relationship between psychotropic use and resident and facility characteristics. Methods: This was a planned analysis of a larger prospective cohort study conducted in CRC facilities (assisted living, adult family home, adult residential care) in a 3-county area in the state of Washington. Interviews and state Medicaid databases were used to collect resident characteristics (demographic data, medication use, activities of daily living, self-reported health, and frequency of memory and behavior problems) and facility characteristics (type, staffing, and occupancy rates). Residents were classified as users or nonusers of psychotropic medications. Suboptimal psychotropic use was defined as use of agents with a higher side-effect profile (tertiary amine tricyclic antidepressants, long-acting benzodiazepines, and low-potency conventional antipsychotics). Logistic regression was used to examine characteristics associated with any psychotropic use at baseline. Results: The typical resident was a white woman, aged 83 years, receiving 7 medications. Nearly half (46.8%) of all residents used ≥1 psychotropic medication at baseline, whereas 16.7% used multiple agents. Antidepressants accounted for the greatest amount of psychotropic use (31.2%). Suboptimal antidepressants, sedative/anxiolytics, and antipsychotics were used by 19.3%, 16.7%, and 7.3% of medication users in each class, respectively. Only age (odds ratio [OR] = 0.97; 95% CI, 0.35–1.00), number of medications (OR = 1.06; 95% CI, 1.00–1.11), and the Revised Memory and Behavior Problems Checklist score (OR = 2.03; 95% CI, 1.28–3.23) were associated with psychotropic use at baseline. Conclusions: Psychotropic medication use was high in CRC facilities (46.8%), with antidepressants being the most frequently used drugs. Use of suboptimal (19.3% of antidepressant users, 16.7% of sedative/anxiolytic users, 7.3% of antipsychotic users) and multiple psychotropics (16.7%) was low.