Between 10% and 20% of children suffer from chronic illness, the severity and impact of which vary considerably. Treatment aims to reduce the potentially negative effects of the illness on the child and the family and to help them achieve a normal life style. It is increasingly clear that the way in which children cope with chronic illness appears to be influenced by the illness, the child's personality, and characteristics of the family and social environment. Recent theoretical approaches suggest that the risk of maladjustment increases when stress increases. More sophisticated methods of sampling and measurement have resulted in recent research that presents a less negative picture of the psychosocial implication of chronic illness. In this article, I give an overview of the effect of chronic illness on children and their families, and I suggest directions for future research.