Background Language development is fundamental for children's intellectual development. Therefore, early stimulation in the first three years of life play an important role especially in disadvantaged communities such as foster homes. Objective To determine the quality of home stimulation and language development, and their correlations in children living in orphanages and family homes. Methods This study was conducted between December 2007 and January 2008. Subjects were recruited from several orphanages in Jakarta, Tangerang, Bogor, also three posyandus in Jakarta and Tangerang. The quality of home stimulation was assessed using Home Stimulation Observation for the Measurement of the Environment (HOME) scores, while language development was assessed using Clinical Linguistic and Auditory Milestone Scale Development Quotient (CLAMS DQ). Results A total of 80 healthy children, consisting of 40 children in orphanages and 40 in family homes were enrolled. Inadequate stimulation and language delay were found to be significantly higher in the orphanage group (52.5% vs. 27.5%; P=0.022 and 57.5% vs. 10%; P<0.001, respectively). HOME Scores and CLAMS DQ were also significantly lower in the orphanage group compared to those in the family home group (25.6 vs 31.5; P<0.001 and 84.0 vs 110.7; P=0.002). Logistic regression revealed that caregiver-child attachment time was the only risk factor for language delay (OR 32.32; P<0.0001), in both orphanages and family homes. Result The quality of home stimulation is lower in the orphanages, which results in a higher rate of language delay in children aged 12-24 months.