Acute disseminated encephalomyelitis (ADEM) is an immune-mediated inflammatory disorder of the CNS characterized by a widespread demyelination that predominantly involves the white matter of the brain and spinal cord. The condition is usually precipitated by a viral infection or vaccination. The presenting features include an acute encephalopathy with multifocal neurologic signs and deficits. Children are preferentially affected. In the absence of specific biologic markers, the diagnosis of ADEM is still based on the clinical and radiologic features. Although ADEM usually has a monophasic course, recurrent or multiphasic forms have been reported, raising diagnostic difficulties in distinguishing these cases from multiple sclerosis (MS). The International Pediatric MS Study Group proposes uniform definitions for ADEM and its variants. We discuss some of the difficulties in the interpretation of available literature due to the different terms and definitions used. In addition, this review summarizes current knowledge of the main aspects of ADEM, including its clinical and radiologic diagnostic features, epidemiology, pathogenesis, and outcome. An overview of ADEM treatment in children is provided. Finally, the controversies surrounding pediatric MS and ADEM are addressed.