Children aged birth to five years are exposed to a disproportionately increased amount of potentially traumatic events compared to older children. This review examines the prevalence of traumatic exposure in the birth-to-five age range, the indicators and diagnostic criteria of early traumatic stress, and the contextual issues associated with the experience of early trauma. The article also selectively reviews the impact of trauma on the biological, emotional, social, and cognitive functioning of young children's development along with some promising clinical treatment and service interventions that target the parent-child relationship as a vehicle of trauma recovery. Despite extensive documentation of the negative impact of trauma on the normal development of young children, research, clinical, and policy efforts to address the psychological repercussions of early victimization remain remarkably limited. Future directions in research and clinical practice as well as implications for policy are discussed.