It is difficult to differentiate the effects of nutritional and psychologic factors during the recovery of malnourished children in the adoptive home. Our investigation attempted to differentiate the nutritional from psychologic stimuli in severely malnourished children who were institutionalized before being adopted by families. Twenty-six children were placed for adoption after hospitalization in the Dr. N. H. Sbarra hospital. All of this study group had suffered from second or third degree malnutrition at the time of admission to the hospital. The mean age at hospitalization was 5 months and the mean stay in the hospital was 6 months. The physical and developmental progress was compared with a control group of 17 well nourished children of similar age at hospitalization and adoption. During the period of hospitalization, all infants received an individualized psychomotor stimulation program along with an adequate nutritional intake. Weight, supine length, language, and adaptive behaviour and developmental quotient were assessed at admission, at the time of adoption, and 6 and 12 months after adoption. All malnourished infants demonstrated a rapid catch-up growth during nutritional rehabilitation in the hospital and during the first months after adoption. There was a significant reduction in rate of psychomotor development in both the malnourished and the control groups during hospitalization despite the stimulation plan. However, the effects of hospitalization on psychomotor development were no longer evident after 6 months of adoption. These observations indicate the independence of nutritional recovery from psychomotor development and confirm the importance of a stable family environment in the rehabilitation of infants.