This paper describes the clinical and research evidence for the importance of the relational context of posttraumatic stress disorder in young children. We review 17 studies that simultaneously assessed parental and child functioning following trauma. In many studies, despite limitations, an association between undesirable parental/family variables and maladaptive child outcomes has been consistently found. We present a model of the parental/family variables as moderators and vicarious traumatic agents for symptoms in young children. Also, a Compound Model is proposed, with three distinctive patterns of the parent-child relationship that impact on posttraumatic symptomatology in young children. Implications for clinical practice and research directions are discussed.