Medically ill children are often exposed to traumatizing situations within the medical setting. Approximately 25-30 % of medically ill children develop posttraumatic stress symptoms and 10-20 % of them meet criteria for posttraumatic stress disorder. Parents of medically ill children are at even higher risk for posttraumatic stress symptoms. Most children and parents will experience resolution of mild trauma symptoms without formal psychological or psychiatric treatment. Posttraumatic stress symptoms are associated with medical nonadherence, psychiatric co-morbidities, and poorer health status. Therefore, evidenced-based trauma-focused treatment is indicated for those who remain highly distressed or impaired. This paper reviews approaches to the assessment and management of pediatric iatrogenic medical trauma within a family-based framework.