There is growing concern about the increasing number of children in the USA who are exposed to community violence and the need to remove some of them from their families. This study examines risk factors for out-of-home placement among a large pool of children and adolescents who were referred for general clinical assessment following exposure to violence and/or psychological trauma in their communities or homes. Children with greater familial and environmental support and children exposed to incidents involving a non-parental personal threat were associated with a significantly lower risk of out-of-home placement. A greater likelihood of being placed out of home was associated with older age (adolescents), history of mental health service use, involvement with law enforcement agencies, higher clinical ratings of depression or impaired thought processes, lower clinical functioning and greater exposure to traumatic events. Evidence of maltreatment and a threat to life was associated with 13.6 times greater likelihood of being placed out of the home. This study raises an important issue in respect to the children's past use of mental health service and current symptoms. It is not just the risk of violence but also evidence of psychiatric problem that trigger out-of-home placement. Further studies are needed to assess the quality and effectiveness of mental health services provided to children exposed to violence.