Dual-energy X-ray absorptiometry (DXA) percent (%) fat estimates may be inaccurate in young children, who typically have high tissue hydration levels. This study was designed to provide a comprehensive analysis of pediatric tissue hydration effects on DXA %fat estimates. Phase 1 was experimental and included three in vitro studies to establish the physical basis of DXA %fat-estimation models. Phase 2 extended phase 1 models and consisted of theoretical calculations to estimate the %fat errors emanating from previously reported pediatric hydration effects. Phase 1 experiments supported the two-compartment DXA soft tissue model and established that pixel ratio of low to high energy (R values) are a predictable function of tissue elemental content. In phase 2, modeling of reference body composition values from birth to age 120 mo revealed that %fat errors will arise if a "constant" adult lean soft tissue R value is applied to the pediatric population; the maximum %fat error, approximately 0.8%, would be present at birth. High tissue hydration, as observed in infants and young children, leads to errors in DXA %fat estimates. The magnitude of these errors based on theoretical calculations is small and may not be of clinical or research significance.