The discovery of trauma as an aetiological factor in mental dissociation is more than a century old, but neurobiological research in the last decade has started to clarify a neurobiological basis that may shed light on the complex symptomatology observed in traumatized children. Dysfunctional stress responses, emotional-based style of functioning, hyperarousal, anxiety, irritability, impulsivity, disengaged attention and educational underachievement may thus begin to be better understood. The aim of this overview is to give an update on the concept of dissociation and the links to new neurobiological findings, hopefully to reduce unawareness, wrong diagnostics or even neglect of dissociative symptomatology by clinicians in child and adolescent psychiatry in the Nordic countries. A systematic overview of studies of mental dissociation in children and adolescents published over the last decade disclosed a total of 1019 references; 309 papers regarding the concept of dissociation, memory, trauma and the neurobiological correlates were studied in detail. The assumption of a trauma-genic basis of dissociation is still most discussed in the literature. The importance of other childhood trauma in addition to sexual abuse is outlined, focusing on childhood interpersonal trauma. Recent research on traumatized children and adolescents has demonstrated some permanent neurochemical as well as functional and structural abnormalities in brain areas that are involved in the integrative process of cognition and memory. This research begins to clarify the cerebral basis and mechanisms for the trauma-related dissociation observed in dissociative (conversion) disorders, post-traumatic stress disorder (PTSD) and somatoform disorders. New perspectives on the nature of subcortical processes linking the phenomena of dissociation and traumatic experiences may have important implications for the understanding of dissociative disorders in children and adolescents. They may be regarded as complex environmentally induced developmental, supporting the view that PTSD and somatization disorders may be specific forms of dissociative processes to be categorized together with dissociative (conversion) disorders as "trauma-related dissociative disorders".