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Placement stability is an important indicator of the functioning of an out-of-home care system. Previous research suggests that frequent placement changes have a negative impact on the outcomes for children and young people in out-of-home care. This paper examines the association between placement stability in out-of-home care and children's socio-emotional, cognitive and physical health outcomes. The Pathways of Care Longitudinal Study (POCLS) is the first large-scale prospective longitudinal study of children in out-of-home care in Australia. The sample consists of any study child who participated in any of the first three waves of the POCLS interview. Unweighted data from the first three waves of the POCLS interview and administrative data was used. A measure of placement stability was developed that accounted for both number of placements and length of time in care. Mixed effect modelling was used to examine the link between placement stability and children's developmental outcomes. Placement stability was found to have a significant association with socio-emotional, cognitive (non-verbal) and physical health (gross and fine motor skill) development. A number of other factors were also found to be associated with positive development. The findings support the existing evidence that placement stability is an important factor for children's development. Other factors including placement type, carer wellbeing and carer support are also important for positive development. Appropriate policy and practice intervention to support children and families to improve placement stability is fundamental to achieving positive developmental outcomes for children in out-of-home care. [ABSTRACT FROM AUTHOR]