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Child mental health disorders represent a major burden to public health in Australia due to high prevalence rates, the widespread impact across domains, and the potential for difficulties to persist into adolescence and adulthood. Extensive evidence exists for the use of parent management training and cognitive behavioural therapy to treat difficulties experienced by children; however, a proportion of children do not benefit as expected from these treatments. The use of complementary therapeutic approaches and variations to the mode and intensity of existing intervention is warranted; family inpatient units represent a unique example of this. The aim of this study is to evaluate the effectiveness of a well‐established Australian inpatient unit that admits the whole family, for children aged 12 years and younger referred with mental health, behavioural, or emotional difficulties. This study's longitudinal within‐subject study design utilised routinely collected outcome data from the systemic clinical outcome and routine evaluation, 15 item (SCORE‐15)—a valid and reliable measure of family functioning—from a sample of 980 participants attending the Family Residential Program. This study reported significant improvement in family functioning across all outcome variables between baseline and post‐intervention, with no variables returning to pre‐intervention levels at follow‐up. Clinically significant changes in overall family functioning showed that 37% of participant scores moved from the clinical range at baseline to the nonclinical range post‐intervention. This study represents the first empirical evaluation of the Family Residential Program, and the reported results provide compelling evidence for the program to effect improvement in family functioning for families with long‐standing and severe difficulties. Poor rates of questionnaire completion following intervention frequent the literature base of family inpatient units, with low post‐intervention (56%) and follow‐up (12%) rates evident in this study. This study uniquely contributes to the growing evidence base of family inpatient units using rigorous evaluation methods. [ABSTRACT FROM AUTHOR]