We examined whether broad factors assessing dimensions of personal competency and community participation could be used to discriminate between people with mental retardation who were living in small group homes and small foster homes. Using a large national sample and multiple discriminant analysis procedures, we found that personal competencies were least important in distinguishing on the basis of setting between people living in the two types of residential placements. Primary differences emerged in factors assessing extent of community participation, family relationships, and recreation/leisure integration. Implications for policy and future research were presented and discussed.