Reviewed research concerning the relationship of parent and family functioning to the psychological adjustment of children with chronic health conditions. More adaptive family relationships and parental psychological adjustment were associated with positive psychological adjustment while less adaptive family relationships (e.g., greater conflict and maternal psychological distress) consistently predicted problematic adjustment. Conclusions were limited by small, site-specific samples, reliance on self-report measures generally obtained from one parent, and general measures. Research progress would be enhanced by (a) more representative data sets; (b) process-oriented, illness-specific, and clinically relevant measures; (c) prospective analyses that clarify specific causal pathways between family functioning and children's adjustment; and (d) tests of interventions that modify risk and/or resistance factors.