More than a decade of investigations into the effects of prenatal cocaine exposure has resulted in cautions optimism that the outcomes for infants are not as overwhelmingly negative as first described. Less understood are the factors which explain why some of these children flourish and others flounder. Well-designed research which examines both biological and environmental factors can further this understanding. This paper examines one aspect of environment by describing attributes of biologic mothers and by tracing the path of infant placement throughout the first year of life. Data were collected from women in the rural south enrolled in a prospective, longitudinal study of prenatal cocaine use. Controls (n=154) were matched to users (n=154) on race, SES, parity and prenatal risk. Of the 151 (live) births of exposed children, 43 were in out-of home placement following delivery. By year one, this number had grown to 64. Prenatal interviews indicated that cocaine-using mothers who lost custody had been significantly more depressed, had lower self-esteem, had lower scores on a proxy measure of intelligence(PPVT-R),and were more often incarcerated than users who did not lose custody or non-using controls. These same women reported using significantly more cocaine (p<.004) and alcohol (p<.0001) throughout pregnancy than mothers who did not lose custody; this paralleled their higher infant rate of cocaine-positive toxicology results at birth (54% vs. 33%; p<.001). At 6 months adjusted age, all infants were tested using the Bayley Scales by blinded evaluators. Those being raised in out-of-home placement had significantly lower mean PDI scores (mean=100) than either exposed infants living with their biological mothers (mean=109) or controls (mean=110; p<.005), even after controlling for amount of cocaine and alcohol use. It is not surprising that pregnant women with more risk factors would be at greater risk of infant separation. Lower PPVT scores suggest an added burden of poorer coping and self-representational skills for some women. However, it is surprising that placement into homes anticipated to be more secure and nurturing has not resulted in better developmental outcomes.