Gender dysphoria (GD) in childhood is a complex phenomenon characterized by clinically significant distress due to the incongruence between assigned gender at birth and experienced gender. The clinical presentation of children who present with gender identity issues can be highly variable; the psychosexual development and future psychosexual outcome can be unclear, and consensus about the best clinical practice is currently under debate. In this paper a clinical picture is provided of children who are referred to gender identity clinics. The clinical criteria are described including what is known about the prevalence of childhood GD. In addition, an overview is presented of the literature on the psychological functioning of children with GD, the current knowledge on the psychosexual development and factors associated with the persistence of GD, and explanatory models for psychopathology in children with GD together with other co-existing problems that are characteristic for children referred for their gender. In light of this, currently used treatment and counselling approaches are summarized and discussed, including the integration of the literature detailed above.