Institutional care plays a vital role in shaping the emotional and behavioral development of children deprived of family environments. Guided by Attachment Theory and Social Control Theory, this study examined the relationships among perceived institutional neglect (PIN), attachment insecurity (AI), emotional dysregulation (ED), and conduct problems (CP) among children living in residential care settings. A cross-sectional survey was conducted with 480 children residing in various government, NGO-operated, and privately managed homes across Karachi, Pakistan. Four validated 5-point Likert-type scales were used to measure PIN, AI, ED, and CP. Data were analyzed using IBM SPSS and AMOS through structural equation modeling. The results indicated that PIN was significantly associated with higher levels of AI and showed significant direct relationships with both ED and CP. Furthermore, AI statistically mediated the relationships between PIN and children’s emotional and behavioral outcomes. These findings suggest that children’s maladaptive emotional and behavioral patterns in institutional care are closely associated with relational and systemic challenges within caregiving environments rather than solely with individual characteristics. The study highlights the importance of enhanced caregiver training, emotional support mechanisms, and the establishment of nurturing and stable environments within residential institutions to promote children’s psychological well-being and social adjustment.