The recent wave of terrorism affecting the United States and other countries raises concerns about the welfare of children and adolescents. This review is designed to address such concerns by summarizing data from two scientific areas. First, a series of recent studies examine psychiatric outcomes over time in children exposed to various forms of trauma. This review summarizes data on the various psychiatric consequences of childhood exposure to trauma, with specific emphasis on identifying factors that predict psychiatric outcome. Prior studies suggest that level of exposure, evidence of psychopathology before trauma exposure, and disruption in social support networks consistently emerge as strong predictors of psychopathology following exposure to trauma. Hence, clinicians might monitor children exposed to trauma most closely when they present with these risk factors. Second, a series of randomized controlled trials documents the beneficial effects of cognitive behavioral therapy (CBT) in children exposed to sexual abuse. When combined with other data from open studies and controlled trials in nontraumatized children, these studies suggest that CBT represents a logical therapeutic option for children developing anxiety symptoms following the recent wave of terrorism. In terms of psychopharmacological treatments, data from randomized controlled trials in traumatized children have not been generated, but recent studies in other groups of children exhibiting symptoms of anxiety or depression suggest the utility of selective serotonin reuptake inhibitors.