Although restorative justice principles and practice have been applied extensively in community-based juvenile justice settings, implementation in residential treatment facilities has been far less common. We describe recent experimentation and possibilities for broader application to disciplinary infractions, the response to harm and crime, promoting community and citizen input, “community building” for conflict resolution skill development and changing the culture of facilities, and reentry. We conceptualize three “communities” as most relevant to addressing needs of incarcerated youths, their victims, and support groups, and then discuss theoretical frameworks and empirical research supportive of restorative practice in this context. Challenges to implementation of restorative practice, compatibility with other treatment and disciplinary agendas, and concerns about preserving the integrity of the model are also considered.