Over the last fifteen years, the deinstitutionalization and transformation processes of social welfare for children have gradually developed with the aim of accommodating young people in more natural environments than institutional accommodation, based on various research on the negative effects of institutionalization. The aim of the deinstitutionalisation is to change the ratio between institutional and non-institutional care in favor of non-institutional care, with special emphasis on family reintegration and the establishment of a network of new social comunity services; while the essence of the transformation process is redefining the function of service providers and the development of non-institutional forms of accommodation such as foster families, family homes and organized supported housing. These are fundamental reforms in recent times concerning child care, starting with the adoption of the National Action Plan for the Rights and Interests of Children from 2006 to 2012, and continuing their development according to the framework set in the Plan of deinstitutionalization and transformation of social care homes. Republic of Croatia from 2011 to 2016 (2018). These processes focus on the wellbeing of children, who in the case of inadequate parental care are to grow up in conditions that are as similar to a family as possible, instead of in an institution. The aim of this paper is to analyze the available foreign and domestic scientific and professional literature, to provide an overview of current knowledge of the processes of deinstitutionalization, including understanding the concepts and development of these processes, both in Croatia and in Europe. The paper provides an overview of the most important documents for the development of these processes, concepts and ideas which they are based on, current situation, current research and challenges in the process of deinstitutionalization and transformation of social care institutions for children and youth.