This study extends research on moral reasoning competence in juvenile delinquents to their practical reasoning and perception of an institutional moral atmosphere in order to find out whether a delay in moral competence is one of the causes of the offence or one of the consequences of institutionalization or both. The study involved 64 delinquent adolescents from a modern, humane, high security detention centre and 81 secondary school pupils, all males. Delinquent adolescents exhibited lower moral competence than non‐delinquents, particularly in (...) the value area ‘obeying the law’, but the difference was smaller than previously reported. Juvenile delinquents' perception of the moral atmosphere in the detention centre was no lower than that of pupils regarding their school and their low moral competence could not be attributed to a poor moral atmosphere in the centre. Thus, the small delay found in moral competence is likely to precede detention. In both the delinquent and pupil groups perception of a poor moral atmosphere was a more important indicator of self‐reported antisocial behaviour than low moral competence. Our conclusion is that improving the perception of the institutional moral atmosphere in school and in prison is more likely to reduce antisocial behaviour among adolescents than only improving their moral competence. (shrink)