North American research suggests that the neighbourhood and community in which children live influence children's development. The author asks if this is the case in Australia and, if so, which children are most affected? The issue of neighbourhood effects on Australian children is relevant to community development policies devised by federal and state governments that aim to foster positive childhood development. The author states that of particular importance is the influence that communities and neighbourhoods have on young children, as the first five years of a child's life are seen to impact on the rest of their lives. Two statistical measures were used to explore neighbourhood effects on children's developmental outcomes: the LSAC Outcome Index which was designed to measure physical, social/emotional and learning domains and the Socio-Economic Indices for Areas (SEIFA) Index of Advantage/Disadvantage. Results from this study suggest that neighbourhood advantage and disadvantage are associated with children's social/emotional, physical and learning outcomes.