Colleen Gwynne says residential foster care, which houses children who cannot be placed with families, is not the best model and an alternative should be found.
The system came under heavy criticism after the ABC's Four Corners program revealed claims in other states that private foster care companies repeatedly failed to support staff and children.
NT Children's Commissioner Colleen Gwynne said similar stories existed in the Northern Territory.
"I would say it's not a good model," Ms Gwynne said. "We often let young people down."
"The providers are just not equipped enough to deal with out-of-home care and the complexities involved. It requires significant training, significant support, and expertise."
"Often the carers are just not trained to deal with challenging behaviours."
There are currently 491 children in foster care in the Northern Territory, 111 of them are in residential care.
The NT government runs six residential care homes in Darwin and Alice Springs, and has outsourced other homes to six private companies.
Ms Gwynne said there was a place for non-government service providers, but added many simply lacked the resources and expertise to deal with foster children.
"On Four Corners ... one of the carers said, 'we are taking children away from situations and circumstances where they are being the subject of abuse and we put them into a placement where their care is no better'," Ms Gwynne said.
"That is my concern and it needs urgent attention."
Ms Gwynne admitted providing better support for children and carers, as well as reunifying families and finding an alternative model, would take time.
"Can we do it tomorrow? No. Can we work towards [a new model]? Absolutely we could," she said.
'Shut resi homes down', former foster child says
The incidents described on Four Corners were no surprise to 19-year-old Jewel Wheeler, who lived in residental care, also referred to as 'resi homes', in Darwin throughout her teenage years.
"The system fails in many ways," Ms Wheeler said.
Ms Wheeler described the resi care homes she stayed in as dysfunctional, prompting children and teenagers to have violent outbursts in an effort to get attention.
"If they were failing to provide me with any support I would just go off and start smashing stuff because we felt that was the only way to communicate to them."
Other events described in Four Corners — including using drugs and sex as a form of escape for the teenagers in care — were also prevalent in the NT, according to Ms Wheeler.
"When we go jump in a relationship with a man that's twice our age or feeding someone drugs to make them happy it's just because that's a reflection on how these people make us feel," Ms Wheeler said.
"You've got carers that will have no problem telling you straight to your face that they don't get paid to look after you.
"That they don't get enough money to look after you, they don't know why they're doing this job when we're nothing but ungrateful little brats that our parents don't even love, and we should go kill ourselves."
She said many carers had to use their own money to buy food for the foster children.
"There was never enough money or food in the house," Ms Wheeler said.
No 'quick and easy solution', Minister says
Families Minister Dale Wakefield said Labor took the issue of residential foster care to the election.
She said she wanted to completely reform the sector by working with Aboriginal organisations and pushing for greater emphasis on individual children and early intervention.
"We're recognising the problem," she said.
"We need to be thinking about what to do with each of those children ... who need individual support and individual case work, and that's the bit we need to be sure we're resourcing properly."
Ms Wakefield said she would ensure a calm and evidence-based approach to reform.
"What we are going to do completely differently is working with the sector and Aboriginal organisations to co-design that model," Ms Wakefield said.
"This is not something that can change quickly, there are complex issues; if there was a quick and easy solution someone would have found it already."
Ms Wakefield said she had already talked with Commissioner Gwynne about changing the system.
"We have a couple of bit pieces of work that need to be done, the long-term reform," she said.
"But we also need to talk about how can we make sure right now that kids who need a safe home are getting it."