Background: Hospitalisation is a potentially traumatic experience for children because they are at a stage of development that is sensitive to stress and unfamiliar environments. A child-friendly hospital environment design and hospital management leadership committed to paediatric services are believed to play an important role in reducing anxiety and negative emotional responses during treatment.

Objective: To assess the effect of child-friendly environmental design on the level of hospitalisation trauma in children and to place these findings within the framework of hospital management leadership, particularly how decisions and leadership styles support the implementation of child-friendly design.

Methods: This cross-sectional analytic study used convenience sampling of 116 parents/caregivers of children hospitalised in several hospitals in Indonesia in September–October 2025. The instruments used included the Child-Friendly Health Care Environment Checklist and the Children's Emotional Manifestation Scale (CEMS). Data were analysed using Pearson's correlation test and multiple linear regression.

Results: Child-friendly environmental design had a significant effect on reducing hospitalisation trauma (β = –0.548; p < 0.001), with the model contributing 48.2% to the variance in trauma. Length of stay had a significant effect, while the child's age and parental education had no significant effect. The discussion shows that the effectiveness of child-friendly design is highly dependent on hospital management leadership in setting strategic priorities, budgeting, and establishing an organisational culture that is sensitive to children's psychological needs.

Conclusion: Child-friendly environmental design has been shown to play a role in reducing the trauma of hospitalisation in children, and its successful implementation is closely related to hospital management leadership. Leadership commitment to incorporating children's psychological well-being into the hospital's strategic agenda is key to integrating physical design, policy, and staff competency improvement in paediatric services