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Background: Sertraline is a selective serotonin reuptake inhibitor with specific indications in child and adolescent psychiatry. Notwithstanding its frequent use and clinical benefits, the relationship between pharmacokinetics, pharmacodynamics, efficacy, and tolerability of sertraline across indications, particularly in non-adult patients, is not fully understood. Method: This naturalistic therapeutic drug monitoring (TDM) study was conducted in a transdiagnostic sample of children and adolescents treated with sertraline (n = 78; mean age, 14.22 ± 2.39; range, 7–18 years) within the prospective multicenter “TDM-VIGIL” project. Associations between dose, serum concentration, and medication-specific therapeutic and side effects based on the Clinical Global Impression scale were examined. Tolerability was measured qualitatively with the 56-item Pediatric Adverse Event Rating Scale. Results: A strong linear positive dose–serum concentration relationship (with dose explaining 45% of the variance in concentration) and significant effects of weight and co-medication were found. Neither dose nor serum concentration were associated with side effects. An overall mild-to-moderate tolerability profile of sertraline was observed. In contrast with the transdiagnostic analysis that did not indicate an effect of concentration, when split into depression (MDD) and obsessive-compulsive disorder (OCD) diagnoses, the probability of clinical improvement significantly increased as both dose and concentration increased for OCD, but not for MDD. Conclusions: This TDM–flexible-dose study revealed a significant diagnosis-specific effect between sertraline serum concentration and clinical efficacy for pediatric OCD. While TDM already guides clinical decision-making regarding compliance, dose calibration, and drug–drug interactions, combining TDM with other methods, such as pharmacogenetics, may facilitate a personalized medicine approach in psychiatry.