Background: Children living with foster families in a resource-limited setting such as Ethiopia are at risk of developmental problems. It is not yet clear whether intensive home-based developmental stimulation assisted by play can reduce these problems. The main objective of this study was to examine the effects of play-assisted intervention integrated into basic services on the developmental performance of children living with foster families in extreme poverty. Methods: A randomized single-blind (investigator) controlled trial design was used. The study was conducted in Jimma, South West Ethiopia. Using computer-generated codes, eligible children of 3-59 months in age were randomly allocated to intervention (n = 39) and control (n = 39) groups at a 1:1 ratio. Children in the intervention group received home-based play-assisted stimulation in addition to the basic services provided to children in both groups. The intervention consisted of an hour of play stimulation conducted during a weekly home visit over the course of six months. Personal-social, language, fine and gross motor outcomes were assessed using Denver II-Jimma, and social-emotional outcome was obtained using an adapted Ages and Stages Questionnaire: Social-Emotional (ASQ: SE). Information about sociodemographic characteristics was collected using a structured questionnaire. Anthropometric methods were used to determine nutritional status. The effects of the intervention on the abovementioned outcomes over the study period and group differences in change over time were examined using Generalized Estimating Equations (GEE). Results: Statistically significant intervention effects were found for language (P = 0.0014), personal-social (P = 0.0087) and social-emotional (P < 0.0001) performances. At the midline of the study, language (effect size = 0.34) and social-emotional (effect size = - 0.603) benefits from the play-assisted stimulation had already been observed for the children in the intervention group. For language, the intervention effect depended on the child's sex (P = 0.0100) and for personal-social performance, on family income (P = 0.0300). Conclusions: Intensive home-based play-assisted stimulation reduced the developmental problems of children in foster families in the context of extreme poverty. Longer follow-up may reveal further improvements in the developmental performance of the children.