Growing concern over possible institutional drug abuse has made it extremely important to identify procedures to systematically evaluate the therapeutic effectiveness of drugs. The authors describe a two-phase drug assessment program that has permitted an intermediate care facility for the mentally retarded to reduce its reliance on psychoactive medication and to meet the mandates of accreditation and law. The first phase identified individuals who could effectively participate in treatment without medication. The second phase identified minimum effective dosages for those whose maladaptive behavior could not be controlled when medication was abruptly removed. Therapeutic benefits resulting from this individualized drug reduction program are discussed, as are the economic and programmatic benefits to the institution.