The present study was designed to evaluate the effects on children (age: M = 5.5 years) in war-torn Bosnia and Herzegovina of a psychosocial intervention program consisting of weekly group meetings for mothers for 5 months. An additional aim was to investigate the children's psychosocial functioning and the mental health of their mothers. Internally displaced mother-child dyads were randomly assigned to an intervention group receiving psychosocial support and basic medical care (n = 42) or to a control group receiving medical care only (n = 45). Participants took part in interviews and tests to provide information about war exposure, mental health, psychosocial functioning, intellectual abilities, and physical health. Results showed that although all participants were exposed to severe trauma, their manifestations of distress varied considerably. The intervention program had a positive effect on mothers' mental health, children's weight gain, and several measures of children's psychosocial functioning and mental health, whereas there was no difference between the two groups on other measures. The findings have implications for policy.