The main purpose of this work is to examine the effects of using children for begging on the psychosocial development of children. Twenty three children used for begging by adults in Addis Ababa were selected purposively and were observed for a month using an observation rating scale. The children also took psychosocial tests (cognitive, social and language competence). Chi-square test indicated the severe condition the children are in. linear regression and one way ANOVA indicated that increased severity level in the condition of these children is highly associated with lower performance in the psychosocial tests. T-test comparison showed that the performance of the case children in the psychosocial tests is found to be significantly lower than a comparison group of non begging children. Interview with adults using children for begging revealed that they are accompanied by children while begging because people sympathize for children which in turn shows that being accompanied by children is more lucrative. Based on the finding relevant recommendations are recommended.