The debate about how, where and by whom young children should be looked after is one which has occupied much social policy and media attention in recent years. Mothers undertake most of the care of young children. Internationally, out-of-home day-care provision ranges widely. These different levels of provision are not simply a response to different levels of demand for day-care, but reflect cultural and economic interests concerning the welfare of children, the need to promote mothers' participation in paid work, and the importance of socialising children into society's values. At a time when a decline in family values is held responsible for a range of social problems, the day-care debate has a special prominence. To quantify the effects of out-of-home day-care for preschool children on educational, health and welfare outcomes for children and their families. Randomised controlled trials of day-care for pre-school children were identified using electronic databases, hand searches of relevant literature, and contact with authors. Studies were included in the review if the intervention involved the provision of non-parental day care for children under 5 years of age, and the evaluation design was that of a randomised or quasi-randomised controlled trial. A total of eight trials were identified after examining 920 abstracts and 19 books. The trials were assessed for methodological quality. Day-care increases children's IQ, and has beneficial effects on behavioural development and school achievement. Long-term follow up demonstrates increased employment, lower teenage pregnancy rates, higher socio-economic status and decreased criminal behaviour. There are positive effects on mothers' education, employment and interaction with children. Effects on fathers have not been examined. Few studies look at a range of outcomes spanning the health, education and welfare domains. Most of the trials combined non-parental day-care with some element of parent training or education (mostly targeted at mothers); they did not disentangle the possible effects of these two interventions. The trials had other significant methodological weaknesses, pointing to the importance of improving on study design in this field. All the trials were carried out in the USA. Day care has beneficial effect on children's development, school success and adult life patterns. To date, all randomised trials have been conducted among disadvantaged populations in the USA. The extent to which the results are generaliseable to other cultures and socioeconomic groups has yet to be evaluated.