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One of four children in the United States lives in a family in which the child is exposed to alcoholism. Children of alcoholics (COAs) are two to ten times more likely to develop alcoholism than non-COAs. This paper reviews studies that have attempted to identify risk factors that mediate the increased vulnerability and the protective factors that moderate the risk. Factors discussed include parental antisocial personality disorder, externalizing behavior, internalizing symptoms, differential response to the effects of alcohol, and positive and negative alcohol-related expectancies. The heterogeneous nature of COAs is emphasized, and some of the challenges related to treatment and prevention are discussed.