Children born to methadone maintained mothers are at high risk of adverse socio-emotional and behavioural outcomes. However, existing studies inadequately report the extent of maternal methadone and other drug use, focus on a narrow range of outcomes, and have given little consideration to the possible impact of child protection and placement experiences. As part of a prospective longitudinal study, mothers of 53 methadone-exposed (ME) children and 54 non-exposed comparison children were interviewed at four time-points from term to the child turning 4.5-years. Detailed information about infant clinical, maternal and family background characteristics was recorded. The nature of all child out-of-home placements was reported at regular intervals using life history calendar methods. At 4.5 years, all caregivers completed the Strengths and Difficulties Questionnaire (SDQ) and were interviewed using the Developmental and Well-Being Assessment (DAWBA) to examine the extent of child socio-emotional and behavioural adjustment problems as well as risk for a range of clinical disorders. By age 4.5 years, ME children were rated by their caregivers as having higher levels of emotional (p = .01), peer-relationship (p = .01), hyperactivity/inattention (p = .01), conduct (p = .01) and total problems (p = .01) than comparison children on the SDQ. Between-groups differences persisted for conduct problems (p = .003) and total difficulties (p = .006) even after controlling for a range of covariates associated with maternal methadone maintenance therapy, including single motherhood, maternal educational achievement, family socioeconomic status (SES), and other drug use in pregnancy. On the DAWBA, children in the ME group were also significantly more at risk than comparison children for externalising disorders spanning ADHD (p = .02), hyperkinesis (p =.01), oppositional defiant disorder (p < .001), and conduct disorder (p = .007). Examination of all study children‟s family situation at 3-monthly intervals over the first 4.5-years revealed that 43% of children in the ME group had experienced at least one foster care placement (range: 1 – 7). In contrast, no comparison children had any placement experience (p < .01). Within the methadone group, maternal risk factors that predicted the likelihood of child placement included maternal methadone dose in pregnancy (p <.01), SES (p = .03), maternal depression (p <.01) and the extent of tobacco (p = .01) and illicit substance use while pregnant (p = .05). ME children exposed to placement showed some increased risk for internalising disorders such as separation anxiety disorder (p = .35) and specific phobia disorder (p = .35), whereas ME children remaining in their biological mothers‟ care tended to have an increased risk for externalising disorders such as ADHD, hyperkinesis and oppositional defiant disorder, although these differences did not reach statistical significance (ps < .05). Child placement did not appear to be independently contributing to the later mental health risks for ME children, at least to age 4.5-years. Rather, a very similar set of maternal psychosocial risk factors were associated with both out-of-home placement and child adjustment problems, thus highlighting the importance of socio-environmental adversity leading to both child removal from parental care and externalising behaviour problems. Further longer-term follow-up of ME children will be important to fully understand the emerging relationships between out-of-home care and the mental health outcomes of ME children. These study findings have important clinical and public health implications. First, the increased risk for socio-emotional and behavioural adjustment problems and disorder as observed among the ME group suggests that appropriate clinical support is needed to address the problems experienced by these children, with the preschool years being a timely opportunity for early targeted interventions. Second, given that high risk ME children are also a population likely to encounter considerable early environmental instability, public healthcare protocols should be introduced to meet the specific developmental needs of young ME children as they transition through and adjust to the placement process.