Acute disseminated encephalomyelitis (ADEM) and multiple sclerosis (MS) in children are relatively rare and the exact incidence is still unknown. There is great variability in clinical presentation and disease course. It is yet unclear which clinical and biological parameters can predict a chronic disease course and progression to multiple sclerosis. The diagnostic difficulties in distinguishing ADEM, MS and related disorders will be discussed. A review of the differential diagnosis, diagnostic tests, treatment and prognosis is given.