Functional abnormalities in fear circuitry are likely to underlie the pathophysiology of pediatric posttraumatic stress disorder (PTSD), but the few studies to date have yielded conflicting findings. Furthermore, network level functional connectivity and age-related disruptions in fear circuitry have not been thoroughly explored. In a cross-sectional design, 24 healthy and 24 medication-free youth with severe PTSD completed an event-related emotion-processing task during functional MRI. Youth viewed threat and neutral images, half of which were paired with a neutral male face. Group-and age-related differences in brain activation were examined in the medial prefrontal cortex (mPFC), amygdala, and hippocampus. Amygdala functional connectivity was examined using a seed-based approach. PTSD youth showed hyperactivation of the dorsal anterior cingulate cortex (dACC) to threat images. In the dorsomedial PFC (dmPFC), age positively predicted activation in healthy youth but negatively predicted activation in PTSD youth. In the amygdala functional connectivity analysis, PTSD youth showed decreased amygdala-mPFC connectivity to threat images. Furthermore, age positively predicted amygdala-vmPFC connectivity in healthy youth, but negatively predicted connectivity in PTSD youth. Finally, dmPFC activation and amygdala-mPFC connectivity were inversely related to PTSD severity. Pediatric PTSD involves abnormal functional activation and connectivity in fear circuitry. Specifically, dACC hyperactivation is consistent with abnormal promotion of fear responses, whereas reduced amygdala-mPFC connectivity suggests impaired regulation of amygdala responses to threat. Importantly, age-dependent decreases in dmPFC activation and amygdala-vmPFC connectivity may indicate abnormal developmental processes in key emotion pathways in pediatric PTSD.