Effects of prenatal cocaine exposure and parental versus nonparental care on outcome at 2 years of age were examined. The sample included 83 cocaine-exposed and 63 nonexposed children and their caregivers; 49 and 34 of the cocaine-exposed children experienced parental and nonparental care, respectively. Prenatal drug exposure was not related directly to children's outcome at 2 years of age. However, compared with cocaine-exposed children in parental care, those in nonparental care experienced a more optimal environment and performed better in several developmental domains at 2 years of age in spite of being at greater neonatal risk. Further analyses suggested that this protective effect of nonparental care was in part due to non kin rather than kin care.