We investigated the psychosocial well-being of children in HIV/AIDS-affected families in rural China from the child’s and caregiver’s perspectives. Semi-structured interviews were conducted among children living in HIV/AIDS-affected families (n = 16), their caregivers (n = 16) and key community informants (n = 5). Our findings showed that all of the children relied heavily on caregivers and peers to gain psychological support. Children’s psychosocial problems included fear, anxiety, grief, and loss of self-esteem and confidence. Stigma towards children existed, including isolation, ignorance and rejection. Our study illustrates that HIV/AIDS has impacted negatively on the psychosocial well-being of children. These findings can be used as preliminary data supporting more researches to profoundly explore the psychosocial impact of HIV/AIDS on children and appropriately indicate the need for interventions.