Poor outcomes and several complaints to the judicial system against residential services for children have triggered a deep review of the Chilean child welfare services, particularly in relation to family reunification. This paper offers strategic guidelines to improve alternative care for children younger than six years of age, who are under protective measures. To define such guidelines, a case study was developed based on current models of residential services and foster home programs, which included local (Chile) and international evidence; also this research includes original empirical data collected through focus groups and interviews with key stakeholders of these programs in Chile and in two countries with advanced social services for children (Sweden and Italy). Findings refer to a structural need for reforming social services for Chilean children. Such reform should involve appropriate legislation to guarantee the rights of children and families; a substantial budgetary review leading to an increase in spending; and boosting professional specialization; and raising the capacity for offering integrated services.