Reported are the findings of a research study to determine the effects of physical environment on the learning behavior of 13 institutionalized moderately and severely retarded individuals (14-18 years old). An introductory section covers the need for research in environmental control, the five study objectives, study procedures, data collection methodology, and the specific hypotheses tested. Examined in a review of the literature are such aspects of architectural design as furniture, space, color, and light. A section on the methods and procedures used in the study includes information on the Ss (participants from a residential classroom), apparatus (a cassette tape recorder for recording researchers' observations), lighting (either general illumination alone or both general illumination and tract lighting), color (including "hot" and "cold" colors), space density (ranging from 500-400 square feet), procedure (which entailed the manipulation of four environmental conditions), and the recording of two types of behavior (on-task behavior and ambient-task movements). Among the effects reported from manipulating color, space, lighting, and space-color were that ambient behavior associated with hyperactivity was not increased by color change and that space reduction resulted in increased on-task behavior. The results of a questionnaire survey involving interior designers, architects, and special educators are also provided in the form of guidelines for designing an appropriate physical environment. Also included are numerous references, tables, and diagrams. (SB)