Examined the influence of family on anxious children's cognition. Research by Barrett, Rapee, Dadds, and Ryan (1996) found anxious children reported increased avoidance after interacting with their parents. They labelled this finding the FEAR effect-Family Enhancement of Avoidant Responses. Whilst some subsequent studies have found similar results, others have not. These contradictory findings question whether the direction of parental influence on anxious children is determined by the perceived demands of the experimental context. Anxious children (N = 101) and their parents were asked to interpret seven ambiguous situations and to discuss what their child would do if the scenario actually occurred. Study 1 found that children in the anxious group and an externalizing control group were more likely to interpret ambiguous situations as threatening than nonclinic children were. Study 2 sought to examine changes in the children's responses from pre- to postfamily discussion, and to identify variables associated with the FEAR effect in anxious families. Interestingly, anxious children whose families completed the discussion task after they (children) had been offered treatment were more likely to show a FEAR effect than anxious families who completed the task as part of assessment. Study 3 examined predictors of enhanced avoidance in anxious families. Treatment context and maternal distress were correlated with the child's increased avoidance following family discussion. Limitations of these studies and directions for future research are discussed.