Chronic illness in a child requires successful organisational and emotional adjustment of the child and the family. The way in which the child and the family adapt to the illness will affect their psychological well-being and their quality of life. This review summarizes recent research findings on the relationship between illness factors, individual and family functioning, coping strategies and psychosocial adjustment. The findings are presented within the framework of three complementary theoretical models: the family developmental approach; the psychosocial typology of illnesses; and the process model of stress and coping. These models are useful for a better understanding of the complex interactions between illness, family and coping and offer to the professionals engaged in the care of chronically sick children, guidelines for assessment and the development of intervention programs. The review starts with examining the impact of chronic illness on the psychosocial adjustment of the sick child, his/her siblings and parents. Then psychosocial Stressors and risk factors in terms of illness and family related characteristics are discussed. Coping resources and strategies are presented which have been shown to be related to child and parental adjustment; and finally, successful intervention programs are described.