Children and youth with high behavioral health needs can receive care in a psychiatric residential treatment facility (PRTF). Overutilization of PRTFs is concerning because they are highly restrictive and costly residential care settings. Intensive Alternative Family Treatment (IAFT®) is an intensive therapeutic foster care program combined with service implementation strategies that is designed to reduce risk for entry to PRTF among youth with high behavioral health needs. This article presents findings from a quasi-experimental study examining the effectiveness of IAFT services in such a population of youth. In this study, we balanced treatment and comparison groups by first sampling youth with intensive care needs as indicated by having a prior PRTF spell. We then used propensity score weighting and covariate adjustment to estimate the effectiveness of IAFT in preventing PRTF re-entry. We found that receipt of IAFT was associated with a 24% lower risk of PRTF re-entry compared with youth who exited from a PRTF in the same state but did not receive IAFT. Sensitivity tests yielded mixed results regarding the effect of IAFT. Overall, results suggest that IAFT is an effective treatment approach for reducing risk for PRTF entry among youth with high behavioral health needs.