Changing population demographics have led to an increasing number of functionally dependent older people who require care and medical treatment. In many countries, government policy aims to shift resources into the community from institutional care settings with the expectation that this will reduce costs and improve the quality of care compared. To assess the effects of long-term home or foster home care versus institutional care for functionally dependent older people. We searched the Cochrane Central Register of Controlled Trials (CENTRAL) via the Cochrane Library, MEDLINE, Embase, CINAHL, and two trials registers to November 2015. We included randomised and non-randomised trials, controlled before-after studies and interrupted time series studies complying with the EPOC study design criteria and comparing the effects of long-term home care versus institutional care for functionally dependent older people. Two reviewers independently extracted data and assessed the risk of bias of each included study. We reported the results narratively, as the substantial heterogeneity across studies meant that meta-analysis was not appropriate. We included 10 studies involving 16,377 participants, all of which were conducted in high income countries. Included studies compared community-based care with institutional care (care homes). The sample size ranged from 98 to 11,803 (median N = 204). There was substantial heterogeneity in the healthcare context, interventions studied, and outcomes assessed. One study was a randomised trial (N = 112); other included studies used designs that had potential for bias, particularly due lack of randomisation, baseline imbalances, and non-blinded outcome assessment. Most studies did not select (or exclude) participants for any specific disease state, with the exception of one study that only included patients if they had a stroke. All studies had methodological limitations, so readers should interpret results with caution.It is uncertain whether long-term home care compared to nursing home care decreases mortality risk (2 studies, N = 314, very-low certainty evidence). Estimates ranged from a nearly three-fold increased risk of mortality in the homecare group (risk ratio (RR) 2.89, 95% confidence interval (CI) 1.57 to 5.32) to a 62% relative reduction (RR 0.38, 95% CI 0.17 to 0.61). We did not pool data due to the high degree of heterogeneity (I2 = 94%).It is uncertain whether the intervention has a beneficial effect on physical function, as the certainty of evidence is very low (5 studies, N = 1295). Two studies reported that participants who received long-term home care had improved activities of daily living compared to those in a nursing home, whereas a third study reported that all participants performed equally on physical function.It is uncertain whether long-term home care improves happiness compared to nursing home care (RR 1.97, 95% CI 1.27 to 3.04) or general satisfaction because the certainty of evidence was very low (2 studies, N = 114).The extent to which long-term home care was associated to more or fewer adverse health outcomes than nursing home care was not reported.It is uncertain whether long-term home care compared to nursing home care decreases the risk of hospital admission (very low-certainty evidence, N = 14,853). RR estimates ranged from 2.75 (95% CI 2.59 to 2.92), showing an increased risk for those receiving care at home, to 0.82 (95% CI 0.72 to 0.93), showing a slightly reduced risk for the same group. We did not pool data due to the high degree of heterogeneity (I2 = 99%). There are insufficient high-quality published data to support any particular model of care for functionally dependent older people. Community-based care was not consistently beneficial across all the included studies; there were some data suggesting that community-based care may be associated with improved quality of life and physical function compared to institutional care. However, community alternatives to institutional care may be associated with increased risk of hospitalisation. Future studies should assess healthcare utilisation, perform economic analysis, and consider caregiver burden.