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Objective We investigated the psychological impact of sibling separation among children who lost both of their parents to AIDS and were placed in group care or kinship care settings in rural China. Methods Comparative analysis of cross-sectional survey data among 155 children among whom 96 experienced sibling separation. Trauma symptoms (Anxiety, Depression, Anger, Post-traumatic stress, Dissociation, Sexual concerns) were compared between the AIDS orphans who experienced sibling separation and those who did not using analysis of variance and multivariate analysis of covariance. Results Among the participants (47.7% girls) with an average age of 12.4 years, univariate and multivariate analyses showed that separation from siblings was associated with significantly higher scores in anxiety, depression, anger and dissociation before or after controlling for gender, age, care arrangement, number of household replacement, trusting relationship with the current caregivers and perceived quality of current living condition. Sibling separation among orphans was not associated with level of post-traumatic stress and sexual concerns. Conclusion AIDS orphans separated from their siblings suffered from increased psychological distress compared with those who remained with their siblings. The data in the current study suggest that care arrangement for AIDS orphan should include accommodating the siblings together or providing them with opportunities for frequent contact and/or communication with each other. Appropriate psychological counselling should be given to those orphans experiencing sibling separation. [ABSTRACT FROM AUTHOR]