Objective: To assess the prevalence of mental health problems in children in foster care, their families’ use of services and the associated costs. Methods: Information on mental health problems, service use and costs was collected, by postal questionnaires and home interviews, on 182 children, their foster carers and teachers from 17 local authorities in Central Scotland. Results: Over 90% of the children had previously been abused or neglected and 60% had evidence of mental health problems including conduct problems, emotional problems, hyperactivity and problems with peer relations. When compared with 251 children from local schools, the children in foster care had significantly higher symptom scores for Reactive Attachment Disorder. Those children with highest scores for mental health problems were attracting a high level of service support from a wide range of agencies, except Child and Adolescent Mental Health Services (CAMHS). Costs were associated with learning disability, mental health problems, and a history of residential care. Conclusions: Children in ‘mainstream’ foster care are at greater risk of mental health problems, and are attracting greatest costs, but CAMHS are not successfully targeting these problems. CAMHS may need to develop new models of service delivery.