Foster children (FC) are at risk of delayed development relative to their peers due to early caregiver disruptions and adverse experiences prior to placement. Descriptive analyses and linear mixed effects (LME models) were used to analyse the cognitive development and social-emotional functioning of 60 FC and 42 comparison children (CC) at 2 (T1) and 3 years (T2). Changes in group differences between T1 and T2 were examined, and significant group differences occurred on all cognitive scales, with the FC obtaining lower scores than the CC. An analysis of social-emotional functioning revealed significantly more externalising, dysregulation behaviour and poorer competencies among the FC, which exhibited significantly better cognitive abilities and competencies at T2 than T1, with the exception of receptive language. The FC did not demonstrate more negative social-emotional behaviour at T2 (apart from more internalisation behaviour), but failed to catch up with the CC. Young foster children need screening and support to improve their developmental potential.