This 4th report from a longitudinal study of U.S. lesbian families presents data from 78 families in which the children were conceived by donor insemination. Results indicate that the prevalence of physical and sexual abuse in these children was lower than national norms. In social and psychological development, the children were comparable to children raised in heterosexual families. Children of unknown donors were indistinguishable from those with known donors in psychological adjustment. In total, 57% of the children were completely out to their peers, and 43% had experienced homophobia. The children demonstrated a sophisticated understanding of diversity and tolerance.