Although Medicaid-funded managed care arrangements are commonly used in the delivery of mental health and substance abuse services to low-income children and youth, little is known about the effectiveness of such efforts. This article examines differences in mental health services utilization between children and youth with severe emotional disturbance covered by Medicaid-funded managed care behavioral health plans and those covered by fee-for-service plans. Data are from a federally funded multi-site study. In multivariate analyses controlling for child and caregiver demographic and clinical factors, enrollment in a managed care behavioral health plan was associated with lower inpatient/residential, psychiatric medication, and nontraditional services utilization. No difference was found in outpatient services utilization. Medicaid-funded managed care behavioral health plans appear to reduce use of some types of mental health services, but it is important to address the question of whether low-income children's enrollment in such programs deprives them of needed services.