The present study evaluated the functioning of 324 children (6–13 years of age) who were hospitalized in an acute-care treatment facility. The major goals were to examine the role of antisocial behavior in predicting clinical course and to examine the extent to which measures of child, parent, and family functioning could predict follow-up status up to two years after discharge. Children with a diagnosis of Conduct Disorder were expected to show greater dysfunction at the inception of hospitalization and over the course of follow-up than children with other diagnoses. Measures were administered at the beginning of hospitalization to assess deviant and prosocial child behaviors, parent psychopathology, and family functioning. Child functioning was assessed repeatedly over the course of follow-up to evaluate performance at home and at school. Significant improvements in behavior were evident over the course of hospitalization. However, only a minority of patients were functioning within the normative range at posttreatment and follow-up. Youths with a diagnosis of Conduct Disorder were functioning more poorly at home and at school over the course of follow-up. Follow-up status could be reliably predicted from severity of initial dysfunction, antisocial child behavior, parent psychopathology and family functioning assessed at the beginning of hospitalization. The results attest to the severity and stability of dysfunction of children with antisocial behavior. The implications of these findings for developing alternative treatments are discussed. New models are suggested to guide clinical applications of treatment and treatment outcome research for the problem of severe antisocial behavior in children.