Objective. To evaluate the prevalence of atypical antipsychotic use in privately insured children and the diagnoses associated with treatment. Study design. Claims were used to conduct a retrospective cohort study of children aged 2 through 18 years in the Midwest, covered by private insurance between 2002 and 2005 (n = 172 766). The 1-year prevalence of children receiving atypical antipsychotics was determined along with associated diagnoses. Results. The 1-year prevalence of atypical antipsychotics ranged from 7.9 per 1000 in 2002 to 9.0 in 2005. The leading diagnoses were disruptive behavior disorders (67%), mood disorders (65%), and anxiety disorders (43%).The authors found that 75% of children on atypical antipsychotics had more than one psychiatric diagnosis. Conclusions. Atypical antipsychotic use is primarily seen in children who have multiple psychiatric diagnoses. Studies are needed to assess the long-term safety and effectiveness in such patients with multiple diagnoses.