Research on families with a mentally retarded child has emphasized the role of stress and coping. Interestingly, many families with a retarded child do not report high levels of stress or disappointment. Further research is needed on the processes contributing to how family members adapt to (1) the presence of a retarded child and (2) the demands of the school setting. A conceptual framework is proposed to account for differences in family adjustment over a 3 year period. The proposed study focuses on the role of family goals, emotional support, and cognitive stimulation within the home as variables that mediate a child's successful transition into the school environment. Three groups will be studied: (1) 40 families with a 5 yr old mildly retarded child, (2) 40 families with a same chronological age (CA) non-retarded child (matched for sex and birthorder), and (3) 40 families with a same mental age (MA) non- retarded child (matched for sex and birthorder). CA and MA comparison groups are needed to differentiate effects related to mental retardation versus other developmental influences. Data to be gathered include: direct behavioral observations of all family members, demographic background, family goals, parents' behavioral strategies to promote social-emotional security and cognitive achievement, home environment, reports of family relationships and social support, family satisfaction, and children's cognitive and social performance. Recently developed instruments that utilize a child dialogue format and provide a reliable picture of the child's view of the family and of self (i.e., perceptions of behavioral strengths and weaknesses) will be used. Each family will be visited twice a year for 3 years. Multivariate repeated measures analysis of co-variance (controlling for SES) will assess the significance of child variables and family variables in determining (a) child's success in school and (b) family adjustment over time. Structural equation analyses will test the degree to which the conceptual framework proposed accounts for differences in how individual families adjust to their retarded or non-retarded child. The findings are relevant to understanding the processes that mediate successful family adjustment and school adaptation.