Cicchetti and Lynch have conceptualized ecological contexts as consisting of nested levels with varying degrees of proximity to the individual. These levels of the environment interact and transact with each other over time in shaping individual development and adaptation. With a sample of maltreated (n = 188) and nonmaltreated (n = 134) children between the ages of 7 and 12 years, this investigation employed a 1-year longitudinal design to conduct an ecological-transactional analysis of the mutual relationships among community violence, child maltreatment, and children's functioning over time. Indicators of children's functioning were externalizing and internalizing behavior problems and self-rated traumatic stress reactions, depressive symptomatology, and self-esteem. Either full or partial support was obtained for the study's primary hypotheses. Rates of maltreatment, particularly physical abuse, were related to levels of child-reported violence in the community. In addition, child maltreatment and exposure to community violence were related to different aspects of children's functioning. Specific effects were observed for neglect and sexual abuse and for witnessing and being victimized by violence in the community. Finally, there was evidence that children and their contexts mutually influence each other over time. Results were discussed within the framework of an ecological-transactional model of development.