The number of emotionally disturbed children in Japan has been increasing recently; However, only few attempts with an aim at improving children's living space have been made at treatment centers. We conducted some field surveys on the cottage-type residential center to examine the relationship among space, communication, and the effectiveness of therapy. In addition, to clarify conditions of treatment for children with emotional disturbances, the children's daily life with milieu therapy was observed. The main results are as follows. 1. In the milieu therapy, it consisted of two dimensions, "counseling" and "daily life", and they were strongly associated. 2. On their daily life, members were working together to establish appropriate relationships. Then, based on their relationships, the staff conducted counseling using spacious elements in the better settings. 3. It can be said that the characteristics such as floor space, the number of children, and the organization of the space, contributed to a better condition for the milieu therapy.