Homeless families face the economic and personal challenges of sparse employment opportunities and child care and nutrition needs, compounded by the loss of adequate housing. The Family Development Center (FDC) is a transitional housing program in Atlanta, Georgia, designed to provide young homeless mothers an opportunity to emerge from what may well be desperate circumstances and begin the journey to economic self‐sufficiency. This paper describes the research on programs for homeless families and presents the results of a comprehensive look at the operation and effectiveness of the FDC program during its first 5 years of existence. The work shows that while many families were able to effect notable positive changes in their lives during and after taking part in the housing program, for some the recovery from homelessness was extremely difficult. For even the most successful formerly homeless families—those that secured employment, housing, and other social supports—the escape from welfare dependence and poverty proved very difficult. The paper concludes with a discussion of the implications for relevant public policy.