Growth in U.S. incarceration rates during the 1980s and 1990s prompted a body of research focused on understanding the diverse effects of incarceration on individuals, families, and communities. An area of particular interest has been how the incarceration of a parent may affect child well-being. Despite what appears to be converging evidence that parental incarceration poses a significant threat to child development, this area of inquiry has yet to overcome important methodological and conceptual challenges related to selection bias. It is therefore unclear whether the difficulties that have been observed among children whose parents are incarcerated are due to the incarceration itself or to other adversities that children have experienced. The purpose of this article is to draw attention to these issues, to summarize empirical and conceptual progress in overcoming these challenges, and to suggest directions for future research.