Managed care involves the linkage of service delivery and financing. One of the outgrowths of the rapid expansion of managed care over the past decade has been an increasing consensus that the generalist of the future will need to manage more of the patients traditionally cared for by subspecialists. Subspecialty education for pediatric residents becomes increasingly important as the role of the pediatric generalist enlarges to include independent outpatient management of some less complex but traditional subspecialty patients as well as collaborative management of more complex patients. To prepare for this role, a balanced exposure to subspecialty problems in outpatient as well as inpatient settings is required. At the same time, however, the growth of managed care has led to certain barriers for providing this enhanced training. This article describes the effects of managed care on the role and scope of the pediatric subspecialist as well as on educational strategies for coping with these changes while reshaping the roles of both generalists and subspecialists for maximal effectiveness in meeting the health care needs of children. Pediatrics 1998;101:779-784.