As part of a UNICEF-sponsored Psychosocial Programme in Bosnia, data were collected from a representative sample of 339 children aged 9–14 years, their mothers, and their teachers in order to investigate risk and moderating factors in children's psychological reactions to war. Self-report data from children revealed high levels of post-traumatic stress symptoms and grief reactions, but normal levels of depression and anxiety. Mothers’ self-reports also indicated high levels of post-traumatic stress reactions, but normal levels of depression and anxiety. Child distress was related to both their level of exposure and to maternal reactions. Structural equation modeling was used to quantify the relationships between these risk factors and child distress, and to examine putative pathways to account for the association between child and maternal health. Children's adjustment was associated significantly with both exposure (φ= .37) and maternal mental health (φ= .37). Modeling also revealed a significant distorting effect of mother's own mental health on behavioural ratings of her child (ψ= .59). Although evidence exists for an association between maternal mental health and mother rating errors, there is also a substantive association between maternal mental health and children's adjustment following war.