The staff of the Children's Service of the Langley Porter Neuropsychiatric Institute have evolved from their experience certain concepts concerning the nature of the nursing skill needed in providing a therapeutic living environment for hospitalized psychotic children, as well as a number of hypotheses pertaining to the methods by which such skill can be attained by the professionally trained nurse. This paper discusses these concepts and hypotheses and their background. It also indicates the nature of work in the first year of a three‐year project supported by a National Institute of Mental Health project grant which was designed to provide a clinical test of the hypotheses.