When used appropriately, congregate care placements can provide children in foster care with the structure and treatment services they need. However, children are often placed in congregate care when their needs can be met in family settings, a practice that contradicts the child welfare mandate to place children in the least restrictive environment possible. In 2000, a class action lawsuit filed against the State of Tennessee highlighted that the state routinely placed children in congregate care settings contrary to their best interests. Since then, the state's Department of Children's Services (DCS) has been extremely successful in reducing its use of congregate care. This paper presents major findings from a qualitative research study that explored how DCS accomplished this critical system change. Fifty-one Tennessee child welfare stakeholders were interviewed using an open ended protocol. DCS administrative data, performance monitoring data, and official policy documents were also analyzed to provide context for the interviewees' comments. Analysis of interview transcripts revealed three main change agents that helped set the stage for deinstitutionalization, as well as three types of systemwide reforms that were undertaken to ensure a successful reduction in congregate care use. Implications for jurisdictions embarking on similar reforms are discussed. (C) 2012 Elsevier Ltd. All rights reserved.