•Review provides a comprehensive update on evidence base for residential treatment.•Of 23 studies, 10 were rated as methodologically strong, 5 as moderate and 8 as weak.•Results provide moderate evidence for the effectiveness of residential treatment.•Effectiveness evident for substance use and other life outcomes.•Best practice integrates mental health treatment and provides continuity of care. Residential treatment is a standard treatment for individuals with severe and complex substance use problems. However, there is limited evidence on best practice approaches to treatment in these settings. This review provides a comprehensive update on the evidence base for residential treatment, and directions for future research and clinical practice. A systematic review of all studies published between January 2013 and December 2018 was conducted. Public health and psychology databases (Medline, CINAHL, PsycARTICLES and PsycINFO) were systematically searched, and forward and backward snowballing were used to identify additional studies. Studies were included if they were quantitative, assessed the effectiveness of residential substance treatment programs for adults, were published in the English language and in peer-reviewed journals. The Effective Public Health Practice Project’s Quality Assessment Tool for Quantitative Studies was used to assess methodological quality. Our search identified 23 studies. Eight were rated as methodologically strong, five as moderate and ten rated as weak. Quality ratings were impacted by attrition at follow-up and research design. Despite limitations, results provide moderate quality evidence for the effectiveness of residential treatment in improving outcomes across a number of substance use and life domains. With caution, results suggest that best practice rehabilitation treatment integrates mental health treatment and provides continuity of care post-discharge. Future research and practice should focus on better collection of outcome data and conducting data linkage of key health, welfare and justice agency administrative data to enhance understanding of risk and recovery trajectories.