Social functioning was assessed using the Child Behavior Checklist and Teacher Report Form for children with anxiety disorders who participated in a randomized clinical trial (N = 161, aged 7-14). Significant relationships were found between severity of children's principal anxiety disorder and most measures of social functioning, such that poorer social functioning was associated with more severe anxiety. Among youth who received cognitive-behavioral therapy (n = 111), significant associations were found between parent-reported social competence and both absence of principal anxiety disorder and lower anxiety severity at posttreatment and 1-year follow-up, controlling for the severity of the child's principal anxiety disorder at pretreatment. Findings support a relationship between anxiety severity and social difficulties, and suggest the importance of social competence for a favorable treatment response.