Severe retardation in a child surely has an effect on all family members. Studies of nondisabled siblings in these families have indicated both emotional risks and perceived benefits. Little is known about how out-of-home placement of the child with retardation affects the siblings. Adolescent siblings of children with retardation living at home (N=25) or in residential placement (N=20) were contrasted with siblings of children without retardation (N=28), on measures obtained from their mothers and themselves. Despite their different situations, these siblings were highly similar on measures of psychological adjustment, self-esteem, and family environment. Sibling relationships, however, were less intense, with less warmth but also lower conflict, in families where the child lived out of the home. Most siblings of children with retardation reported positive personal growth experiences while also expressing realistic concerns about the future. Siblings of children with retardation had beliefs and attitudes about placement that were highly consistent with the child's current living situation.