This study examined changes in children's functioning in the year following traumatic brain injury (TBI) and the preinjury family and injury factors most predictive of children's overall adaptive functioning and social competence at 1 year. Ninety-four children with TBI (mild = 50, moderate = 25, severe = 19) and their families were consecutively enrolled from two regional medical centers. The age range was from 6 years to 15 years. Interviewer ratings and standard measures of family and child functioning were completed within 3 weeks of injury (measuring preinjury status), at 3 months and 1 year. Mean preinjury parent and teacher ratings of child functioning were within normal range. Older children (> or = 12 years) had worse preinjury functioning than younger children. Declines in child functioning were significantly associated with injury severity. Mild and moderately injured children had few declines in overall functioning. Severely injured children had the most dramatic early declines and improved only slightly between 3 months and 1 year; however, older children from poorly functioning families deteriorated in the same period. Injury severity and preinjury family functioning explained from 25% to 39% of the variation in child functioning at 1 year and up to 57% when the child's preinjury status was included. Children at risk for poorer adaptation following TBI can be identified and for optimal recovery should receive appropriate support services for optimal recovery.