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Long-term survival rates among children diagnosed with severe aplastic anemia (SAA) are excellent due to the success of human leukocyte antigen (HLA)-identical related hematopoietic stem cell transplantation (HSCT), concurrent advances in immunosuppressive treatment (IST), and improved supportive care. The challenge in making treatment recommendations for children with SAA, therefore, is to balance the apparent chronicity and morbidity following IST, with the potential up-front toxicity and complications of HSCT.This review provides an update on the diagnosis and a risk-based treatment algorithm for children with acquired SAA. Recent experience using alternative donor HSCT and efforts to extend HSCT eligibility through advances in donor matching, de-escalation of conditioning regimens, and potential marrow graft engineering are highlighted. We discuss IST response rates, risks of relapse, and complications including clonal evolution.While good treatment options exist for a majority of children diagnosed with SAA, novel non-transplantation treatments for unresponsive and relapsed patients without suitable transplant donors are needed. Further improvements in outcome will ultimately require a more complete understanding of the pathophysiology of aplastic anemia (AA). © 2005 Wiley-Liss, Inc.