The present randomized controlled trial examined the effectiveness of Parent Management Training Oregon for foster parents with foster children (aged 4-12) with severe externalizing behavior problems in long-term foster care arrangements. Foster children’s behavior problems are challenging for foster parents and increase the risk of placement breakdown. There is little evidence for the effectiveness of established interventions to improve child and parent functioning in foster families. The goal of Parent Management Training Oregon, a relatively long and intensive (6-9 months, with weekly sessions) parent management training, is to reduce children’s problem behavior through improvement of parenting practices. We specifically investigated whether Parent Management Training Oregon is effective to reduce foster parenting stress. A significant effect of Parent Management Training Oregon, compared to Care as Usual was expected on reduced parenting stress improved parenting practices, and on reduced child behavior problems. Multi-informant (foster mothers, foster fathers, and teachers) data were used from 86 foster families (46 Parent Management Training Oregon, 40 Care as Usual) using a pre-posttest design. Multilevel analyses based on the intention to treat principle (retention rate 73 %) showed that Parent Management Training Oregon, compared to Care as Usual, reduced general levels of parenting stress as well as child related stress and parent-related stress (small to medium effect sizes). The clinical significance of this effect was, however, limited. Compared to a decrease in the Care as Usual group, Parent Management Training Oregon helped foster mothers to maintain parental warmth (small effect size). There were no other effects of Parent Management Training Oregon on self-reported parenting behaviors. Child behavior problems were reduced in both conditions, indicating no additive effects of Parent Management Training Oregon to Care as Usual on child functioning. The potential implication of reduced foster parenting stress for placement stability is discussed.