Sixteen children with pancreatic pseudocysts were treated from 1965-1988. Blunt trauma was the etiology of pseudocyst formation in 69 per cent of children with 50 per cent resulting from the abdomen impacting bicycle handlebars. Chronic pancreatitis is an uncommon cause of pseudocyst formation in children. Medical therapy is directed towards reduction of pancreatic stimulation and nutritional support, which are maintained through pseudocyst resolution or maturation. Pseudocysts spontaneously resolved in 25 per cent of patients. Complications occurred in 25 per cent during nonoperative management. Children may safely undergo internal drainage earlier than adults (3-4 weeks vs 6 weeks). Internal drainage by cystoenterostomy was curative in eight patients. Persistent fistula drainage developed for five weeks in one patient who had surgical external pseudocyst drainage. One patient required distal pancreatectomy for a transected pancreatic duct. Spontaneous resolution of psseudocysts while on medical therapy is more frequent in children than in adults, and major complications (abscess formation, hemorrhage, and fistula formation) are usually not encountered. Pseudocyst rupture is the major complication of conservative management. We had no pseudocyst recurrences and 11 of 12 children treated surgically were discharged home within ten days of operation.