ABSTRACT Children with chronic illness are found to be at greater risk for psychiatric problems, including depression, anxiety and feelings of isolation. Particularly, HIV positive children in underdeveloped nations are more likely experiencing psychological disorders and live with socially alienated social support systems. In present study, institution-based cross-sectional research design was employed to assess the prevalence of mental health distress among HIV positive children 115(F = 69) in Ethiopia. Systematic random sampling technique was used to select participants. Quantitative data were collected with standardized instruments. Nurse Counsellors and case managers from the children’s ART department participated in sample selection and data collection under the close supervision of a researcher. Descriptive and inferential statistical methods were used to analyze the quantitative data. The key findings of this study revealed that 57.4% HIV positive children reported high level in measures of anxiety and 52.2% had high depression level, while 47.8% had low self-esteem. Children’s ages, parental conditions, and perceived social support shown significant association with participants’ mental health condition. Perceived social support was a powerful set of predictors of children level of anxiety F = 1, 113 24.526, p < .001 and self-esteem F = 1, 113 6.494, p < .0.05. Furthermore, children’s age was a strong predictor of mental health status. The present study finding asserted that HIV positive children require a lifetime of continuous treatment, care and support to ensure their physical and mental development. This study reminds families, caregivers and healthcare institutions of the development of appropriate prevention and intervention program to alleviate stressful life events and improve the psychological well-being of HIV positive children.