<i>Background:</i> Separation anxiety disorder (SAD) is one of the earliest and most common mental disorders in childhood, and a strong predictor of adult psychopathology. Despite significant progress in psychotherapy research on childhood anxiety disorders, no randomized controlled trial has been conducted with a disorder-specific treatment program for young children suffering from SAD. <i>Methods:</i> Forty-three children (ages 5–7) with SAD and their parents were assigned to either a 16-session disorder-specific SAD treatment program including parent training and classical cognitive-behavioral therapy (CBT) components, or to a 12-week waiting list group. Categorical and/or continuous data for anxiety, impairment/distress and quality of life were collected at baseline, after treatment/waiting list condition, and at a 4-week follow-up. <i>Results:</i> Intention-to-treat analyses indicate that 76.19% of children allocated to the treatment group definitively no longer fulfilled DSM-IV criteria for SAD at follow-up, compared to 13.64% in the waiting list group. Between 91 and 100% of children rated themselves or were rated by their father, mother or therapist as very much or much improved on the global success rating immediately after treatment. Results indicated large time by treatment condition interaction effect sizes (d = 0.98–1.41) across informants for reduction of distress/avoidance in separation situations after the test for the treatment condition. Further, parents reported significant improvements in impairment/distress in the child’s major life domains and the child’s quality of life. Treatment gains were maintained at the 4-week follow-up assessment. <i>Conclusions:</i> Results indicate the short-term efficacy of a disorder-specific treatment approach for SAD, and are among the first to indicate that CBT programs work with young children.