Osteoporosis is increasingly recognized as a complication of chronic childhood illnesses, particularly when glucocorticoids (GCs) are necessary for treatment. Elucidation of the mechanisms leading to bone fragility in these settings requires disentanglement of the relative contributions of myriad risk factors, including disease activity, muscle weakness, immobilization, delayed growth and puberty, compromised nutrition, and osteotoxic medications. Over the years, bone mass and density evaluations by dual energy X-ray absorptiometry (DXA) have become popular for assessing bone health in children; however, such measurements are difficult to interpret because of the confounding effect of bone size and the lack of DXA-based densitometric criteria for defining osteoporosis in childhood. Recently, a new diagnostic approach for evaluation of densitometric data in children has been suggested, driven by Frost’s mechanostat theory. A diagnostic algorithm based on the mechanostat theory of bone-muscle development is proposed for the characterization of bone disease in children with chronic illness. In addition to DXA-based assessments, techniques such as peripheral quantitative computerized tomography and ilial histomorphometry, for which there are pediatric reference data, are gaining ground in the characterization of skeletal changes due to chronic illness. Although these diagnostic techniques expand our understanding of osteoporosis in children, they do not replace clinical assessment. Concrete clinical evidence for GC-induced bone fragility can be seen in spinal changes due to vertebral compression, with spinal morphometry emerging as an essential, but frequently overlooked, tool in the evaluation of children’s bone health. Presently, osteoporosis treatment in the chronic illness setting remains experimental and should be restricted to clinical studies. Following an understanding of the natural history of GC-induced osteoporosis in children, randomized, placebo-controlled prevention and intervention trials will be the next step toward the development of clinical practice guidelines.