Adaptive and challenging behavior changes associated with movement from Minnesota's state institutions to community homes were examined. Most of the 148 participants who moved had severe or profound mental retardation, significant challenging behavior, and several decades of institutionalization. Adaptive and challenging behavior were assessed in the institution and thereafter annually in the community. Relative to institutional levels, adaptive behavior declined among residents who moved to community ICFs/MR but was unchanged for the HCBS Waiver group. Challenging behavior tended to worsen initially but, except for internalized behavior, no longer differed from institutional levels by the second community assessment. Change in challenging behavior was unrelated to community residence type. Previous papers involving these participants showed consistent lifestyle enhancements and reduced service costs relative to the institution.