This study examines the psychological impact of children's exposure to violence and the influence of mothers' knowledge about their children's encounters with violence. Our sample consists of a poor, multiethnic sample of 104 fourth- or fifth-grade children and their mothers. Children in this sample were exposed to rather high levels of community violence, and on the whole, mothers greatly underestimated their children's exposure to violence and feelings of psychological distress. Hierarchical regression analyses indicated that children's exposure to violence was associated with greater psychological distress. Our findings suggest that the detrimental effects of community violence are present for all children, irrespective of their racial background. Further, greater mother-child agreement about children's exposure to violence was related to better psychological functioning. The implications of these results for effective parenting strategies and community-based interventions are discussed.