BACKGROUND: Many states recently have experimented with managed care as a way both to control costs and to enhance continuity of care in their publicly financed programs. A few states have applied managed care models to the care of chronically ill children. One marker for the effects of managed care is changes in use of the emergency department (ED). OBJECTIVE: We sought to determine whether a managed care program can reduce ED use for children with chronic health problems. SUBJECTS: We studied chronically ill children who were dually enrolled in Michigan’s Title V program for children with special health care needs and Medicaid and who were enrolled in a managed care option at some time during the study period. The managed care model emphasized care coordination and did not include strong financial incentives for utilization and cost control. Sample consisted of 8580 person-months. METHOD: We used a fixed-effect negative binomial Poisson regression model to compare ED use before and after joining a managed care plan to test whether managed care use was associated with reduced likelihood of ED use. RESULTS: Managed care enrollment was associated with a 23% reduction in the incidence of ED use among children dually enrolled in Medicaid and Title V. CONCLUSIONS: A managed care model is associated with statistically significant and substantive reductions in observed use of ED care within an important population of children facing chronic illness.