Few studies report treatment outcome for early childhood internalizing disorders following psychotherapy, especially psychodynamic techniques. We aimed to investigate effectiveness of a novel, developmentally appropriate, short-term psychodynamic treatment program for 4- to 10-year-olds with anxiety disorders in an outpatient setting. We conducted a quasi-experimental wait-list controlled study. Thirty children (12 females) with Diagnostic and Statistical Manual of Mental Disorders (DSM-IV) anxiety disorders and their families received 20-25 sessions of manualized short-term Psychoanalytic Child Therapy (PaCT). We assessed outcome with standardized diagnostic interviews and parent reports of internalizing and total problems at all time points. Child puppet interviews and teacher reports were also available for pre-post treatment and follow-up analyses. While 18 families entered treatment immediately, 12 families were first wait-listed before receiving treatment. Analyses of symptom improvement were based on comparisons between groups (treatment vs. wait-list) as well as pre-post and 6-month follow-up data across all families (including wait-listed families). Among the 27 completers, 66.67% (n = 18) no longer met criteria for any anxiety disorder (59.88% in intent-to-treat analysis) while no children remitted across the wait-list interval. Parent-reported child internalizing and total problems significantly declined during treatment relative to wait-list. Child and teacher reports also revealed significant pre-post symptom reductions on internalizing and total problems. Diagnostic and symptom remission rates were maintained at 6-month follow-up except on child reports. This preliminary study adds to a growing database showing that psychodynamic treatments may offer an effective line of treatment for childhood internalizing symptoms and disorders in the eyes of clinicians, children, parents, and teachers.