This article elucidates the theoretical underpinnings of cognitive-behavior therapy (CBT) as applied to the treatment of anxiety disorders in children, focusing on social phobia, generalized anxiety disorder, and separation anxiety disorder. It reviews behavioral and cognitive theories that have influenced this approach. We argue that it is necessary to understand the essential components of this approach in the context of these theories in order to provide effective, clinically sensitive, and child-focused treatment. Components discussed include assessment, psychoeducation, affective education, self-instruction training, cognitive restructuring, problem solving, relaxation training, modeling, contingency management, and exposure procedures. Hypothesized key processes, such as the need to be experiential in treatment, are presented for consideration. Keywords: anxiety; children; cognitive behavior therapy; theory Anxiety disorders are among the most common mental health disorders in youth with prevalence rates ranging from 12% to 20% (Achenbrach, Howell, McConaughy, & Stanger, 1995; Velting, Setzer, & Albano, 2004). Left untreated, these disorders tend to have long-term effects on social and emotional development. Negative consequences associated with anxiety disorders in youth include lower levels of social supports, academic underachievement, underemployment, substance use, and high comorbidity with other psychiatric disorders (Velting, Setzer, & Albano, 2004). Moreover, evidence suggests that these disorders demonstrate a chronic course, often persisting into adulthood (Rapee & Barlow, 1993). Despite these costs, only a small percentage of children with anxiety disorders receive treatment. This group may be underserved for a number of reasons including the covert nature of their symptoms. However, there is also a shortage of treatment providers trained to recognize and provide effective treatment for these children. The American Psychological Association has urged the dissemination of empirically supported treatments. Numerous clinical trials have demonstrated the efficacy of CBT for treating anxiety disorders in children (Dadds, Spence, Holland, Barrett, & Laurens, 1997; Kendall, 1994; Kendall et al., 1997; Short, Barrett, & Fox, 2001; Silverman et al., 1999). The CBT approach tends to be multifaceted, incorporating a variety of cognitive and behavioral techniques. Although early efforts focused primarily on the child in treatment, more recent studies support incorporating the anxious child's social context, particularly the parents and school, into CBT treatment. A number of treatment manuals that share many common elements have been developed for this population, perhaps best known being the Coping Cat program (Kendall, 2000). Manuals provide greater opportunity for training, help ensure treatment integrity, and lend themselves to dissemination. However, caution must be exercised when disseminating a treatment manual. We can anticipate the problems that can be encountered when therapists attempt to implement manualized procedures without understanding the theoretical principles that guide them. Such a lack of knowledge leads to overly rigid implementation of procedures and, at times, using the procedures in a manner that violates the principles upon which they are based. For example, to increase participation in out-of-session exposure assignments that promote generalization of treatment gains, a manual may call for delivery of stickers for completion of homework and the earning of a prize when a certain number of stickers have been earned. This may sound like a straightforward procedure; however, the delivery of this system is informed by our knowledge of reinforcement principles. Certain children may require a more or less frequent reinforcement schedule; others may find the therapist's encouragement more rewarding than a tangible prize while others may find the delivery of stickers aversive or lacking in reinforcement value. …