Background The World Health Organization (WHO) recommends that children should be informed of their HIV status at ages 6 to 12 years and full disclosure of HIV and AIDS be offered in a caring and supportive manner at about 8 to 10 years. The objective of this study was to determine factors associated with HIV status disclosure and its effect on treatment adherence and health-related quality of life among children between 6 and 17 years of age living with HIV/AIDS in the Southern Highlands Zone, Tanzania, 2017. Methods A hospital based unmatched case control study was conducted between April and September 2017. A total of 309 children between 6 and 17 years on ART for at least six months were enrolled in this study. Simple random sampling was employed in selecting the children from existing treatment registers. Data were collected using a structured questionnaire which included the WHO Quality of Life standard tool (WHOQOL-BREF 2012 tool) and treatment adherence manual. Multiple logistic regression was used to test for the independent effect of HIV status disclosure on treatment adherence and quality of life at p value less than 0.05. Results Out of 309 children, only 102 (33%) had their HIV status disclosed to them. The mean age at HIV status disclosure was 12.39 (SD=3.015). HIV status disclosure was high among girls (51%), children aged 10-13 years (48.3%), and those living with their biological parents (59.8%). After adjusting for confounders, being aged between 10-13 and 14-17 years was associated with HIV status disclosure (AOR 19.178, p<0.05 and AOR=65.755, p<0.001, respectively). HIV status disclosure was associated with ART adherence (AOR=8.173, p<0.05) and increased the odds of having good quality of life (AOR=3.283, p<0.001). Conclusions HIV status disclosure significantly improved adherence to treatment and quality of life among children living with HIV/AIDS.