Young children are often called as witnesses to crimes they were victims of or observed. Because of their immaturity, child witnesses are sometimes more heavily scrutinized than adult witnesses before being allowed to testify in court, for example, through competency screening. This review discusses the psychology and US law relevant to decisions about children's testimonial competency. Legally, a child is competent to provide in-court testimony if the presiding judge finds that the child can understand and answer basic interview questions, observe and recall pertinent events, understand the difference between truths and lies, and be affected by the moral obligation to tell the truth on the stand. We review the legal foundation and current practice of testimonial competence standards and discuss issues in the current system. We then review developmental psychology literature on children's capabilities and individual differences in each domain of testimonial competency as well as the limited body of literature on competency exams. Finally, we make empirically-based recommendations and conclusions and highlight the need for further research and policy reforms related to children's testimonial abilities.