The diagnosis of childhood cancer has a devastating effect on the family because of its life threatening nature requiring major shifts in lifestyle and psychological reality. An awareness of the developmental and cognitive levels of the child at the time of diagnosis, and the psychological and situational status of the family is crucial to providing appropriate interventions. The pre-diagnostic and diagnostic stages of the illness provide an opportunity to assist the child and family in developing healthy adjustment strategies for both acute and long-term issues. The child and the family need to develop new coping skills, make use of outside support and resources, and receive specific interventions in order to maximize their adjustment. Continuing improvements in outcomes of cancer therapy and in psychotherapeutic treatment will reduce the psychological impact and assist in the child and family's adjustment to childhood cancer.