In children, the most abundant available information regarding the effects of paediatric sleep disturbance on daytime function has been obtained by studying children with sleep disordered breathing (SDB). The purported underlying pathophysiological mechanisms responsible for these deficits include hypoxia secondary to obstructive apneas/hypopneas and/or disrupted sleep architecture from frequent arousals during sleep. This review will present evidence that, while hypoxia is likely to play a role for many children with SDB, sleep disruption is an important and often overlooked factor that can contribute to daytime deficits in children with SDB. Indeed, sleep deprivation and disruption appear to have a potent impact on the daytime functioning of the much larger number of children with non-respiratory sleep disorders. It is concluded that sleep deprivation, sleep disruption, and intermittent hypoxia independently may be sufficient to cause daytime effects in vulnerable children, and the combination of two or more of these factors can result in particularly impaired daytime functioning. These conclusions have significant implications for research and clinical practice.