The article reviews developmental research among Palestinians living in Gaza. The aims are, first, to analyse how exposure to traumatic events associates with children’s mental health and their cognitive, emotional and social development. Second, we aimed to model familial and symbolic processes that can either harm or protect the mental health of children. Third, we wanted to learn who the resilient children are in conditions of war and military violence. The reviewed research has been conducted in the context of a Palestinian non-governmental organization, the Gaza Community Mental Health Programme, during the political upheavals involving hopes for peace and intensive war and violence: the First Intifada (1987–1993), the Palestinian Authority rule (1994– ) and the Second Al Aqsa Intifada (2001– ). The results show that life threat, violence and losses form a risk for increased psychological distress. There are, however, a myriad of child, family and society related factors and psycho-socio-physiological processes that protect child development and mental health. They include, e.g. loving and wisely guiding parenting, children’s flexible and high cognitive capacity, flexible and multiple coping strategies and narrative and symbolic nocturnal dreaming, as well as social support and good peer relations. Different models explain psychological distress and positive resources, including child resilience. Exposure to trauma is crucial in predicting distress, while familial and developmental issues are important in building resilience. Children’s conscious and unconscious cognitive-emotional processes are crucial for underlying mental health and knowledge about them is important in tailoring evidence-based preventive interventions among war victims.