Localized scleroderma (LS) is a complex disease characterized by a mixture of inflammation and fibrosis of the skin that, especially in the pediatric population, also affects extracutaneous tissues ranging from muscle to the central nervous system. Although developmental origins have been hypothesized, evidence points to LS as a systemic autoimmune disorder, as there is a strong correlation to family history of autoimmune disease, the presence of shared HLA types with rheumatoid arthritis, high frequency of auto-antibodies, and elevated circulating chemokines and cytokines associated with T-helper cell, IFNγ, and other inflammatory pathways. This inflammatory phenotype of the peripheral blood is reflected in the skin via microarray, RNA Sequencing and tissue staining. Research is underway to identify the key players in the pathogenesis of LS, but close approximation of inflammatory lymphocytic and macrophage infiltrate with collagen and fibroblasts deposition supports the notion that LS is a disease of inflammatory driven fibrosis. The immune system is dynamic and undergoes changes during childhood, and we speculate on how the unique features of the immune system in childhood could potentially contribute to some of the differences in LS between children and adults. Interestingly, the immune phenotype in pediatric LS resembles to some extent the healthy adult cellular phenotype, possibly supporting accelerated maturation of the immune system in LS. We discuss future directions in better understanding the pathophysiology of and how to better treat pediatric LS.