Handgrip strength (HGS) is a simple measurement of maximum voluntary muscle strength and is widely used as a single indicator of overall muscle strength. This systematic review summarized the evidence about the relation between HGS and health outcomes in hospitalized children or chronically ill children. The primary outcome was the number of hospital days in a 2‐month period for outpatients and the length of hospital stay for inpatients. After a systematic search in PubMed, Embase, Lilacs, and the Cochrane Library, 9282 unique papers were screened, 24 included. Studies assessed HGS in children with cystic fibrosis, neuromuscular disease, chronic kidney disease, type 1 diabetes mellitus, asthma, cardiac disease, juvenile idiopathic arthritis, intestinal failure, surgical patients, and a mixed hospitalized population. One study reported that children experienced a decline in HGS during hospitalization which was associated with prolonged hospital stay. Another reported no relation with the number of hospital days in 5 years. No studies reported on the association between HGS and infectious complications or antibiotic use. We did find a positive correlation between HGS and quality of life, different nutritional parameters and inflammatory biochemical markers. We concluded that the relation between HGS and hospital stay in children is poorly studied. HGS showed promise as a functional biomarker for children with chronic health conditions when inflammation is involved, but more attention should be paid to the methodological aspects of assessing HGS.