Anxiety disorders are prevalent throughout childhood and adolescence. As such, identifying the factors and mechanisms that precede, maintain, or exacerbate anxiety disorders is essential for the development of empirically based prevention and intervention programs. The current review focuses on child temperament (i.e., behavioral inhibition) and the child's environment, including parenting, childcare, and peer relationships, as these factors have been linked to internalizing problems and anxiety diagnoses. Research programs are needed that examine the associations between the environment and anxiety in temperamentally at-risk populations. In order to be successful, early intervention and prevention programs require a more detailed analysis of the interplay between various environmental contexts, both distal and proximal to the child, and the child's temperamental reactivity to novelty and threat. Furthermore, conducting these investigations across multiple levels of analysis in large-scale, longitudinal samples would be an important addition to the literature on the developmental psychopathology of anxiety.