Helping your nephew during this challenging time is a very caring and loving gesture. He has clearly been through a lot, and I think that it is wonderful that you are there for him and are determined to learn as much as possible about helping him through this difficult period. Here are some things to think about as you care for him:
Although I don't know the extent of the problems that led to his removal from his parent's care, I imagine that they were pretty severe. CPS does not remove children from a home without considerable care and consideration.
Thus, I'm stating what you already know; this little guy has been through a lot, and he has most likely received very little consistent care and discipline. This is important because it suggests that his "foundation" of attachment to adult figures is probably pretty shaky, and he most likely has very little trust and faith in adult's ability to love him and take care of him. Experts often talk about how children in this sort of situation have significant problems with attachment. I have included a link to additional information on attachment below.
Children with insecure attachments will typically test the adults in their life over and over and over again. Although, they are not consciously aware of it, they are essentially asking the question, "Can I really count on you? Will you leave me? Will you be there for me?" Children with an insecure attachment have a tendency "ask" these questions in a funny way. They act out, they get angry, they fight, they cry. They are in pain over the shaky foundation that has been laid, and they just don't have the awareness, language, or guts to ask for what they want from adults.
How do you help your nephew in this situation? You do it by doing your best to keep these facts in mind, grit your teeth, and do your best to ride his anger out. Remember, he is in real emotional pain. Stay calm and reassure him, "I love you, and I am here for you. Nothing you do can change that." You may not like his behavior, but you can make that distinction for him, "I love you, but I can't accept this behavior. It is my job to teach you what is right and wrong. A consequence of your behavior is...."
And, you will do well with a consistent routine and discipline. Clearly state what the expectations are, what the consequences of misbehavior are and be consistent. Consistent, consistent, consistent. That should be your mantra during this time. He hasn't had any consistency, and he so needs it from you.
Also, you want to balance out the hard discipline stuff with special time. Make an effort at least once a day or every couple of days to spend twenty minutes with him just playing and doing whatever he wants to do (within reason, of course). Join him on the floor as he plays with legos and let him lead the play. Give him all your attention and let him know that you are there for him and are glad to have the opportunity to play with him. This special time sets the foundation for a warm and loving relationship that will help you to be even more effective as a "parent" when it comes time for discipline.
Above all, make sure that you take care of yourself. Your nephew will be very challenging at times, so make an effort to talk with supportive friends and relatives and get breaks when necessary. You have a wonderful opportunity here to help turn the tide for this young boy. With consistent love and structure, you can help him to grow into a secure and loving boy and man.
From my own personal experience I understand this little nephew of yours. Just be strong and let him know you are not going anywhere! Tough love (Holding until the fit stops, enforcing rules, being consistent)etc. He just has to know that you will be there and love him no matter what and at this time, he is probably testing his grounds. Best of luck to you!
With calm and love. He is missing his parents, he's probably been through a lot for his age. It takes time, but love and understanding are the only key. He needs to feel loved, he needs to build in his mind a familiar place to be in.
Love. Be patient, be understanding, be what he needs now. Please.