This article describes a combined quantitative and qualitative approach to assessing the need for mental health services of looked after children. We interviewed 48 children and young people who were accommodated by one local authority in foster care, children's homes and residential schools. Fifty-six per cent of our sample were suffering from significant psychological morbidity. Forty-four per cent had a definite, probable or resolving diagnosis of at least one psychiatric disorder with impaired psychosocial functioning. Self-esteem was preserved to a variable extent across different domains. In most cases, problems in psychological development had been identified at a young age and the majority had previously been assessed, and some treated, by the local psychiatric service. Most of the participants had strategies for managing distress, made good use of available support networks and were happy with the level of care they were receiving. We concluded that a majority of children and young people looked after by our local authority suffer from chronic and disabling mental health problems despite early recognition of their difficulties, attempts at solutions and supportive care settings. The need we identified was not for improved recognition of mental health problems, but rather for more effective interventions. KEYWORDS care; children; mental health; needs assessment; social exclusion. [ABSTRACT FROM AUTHOR]