Objective To investigate the economic disease burden and true level of reimbursement of children with serious illness in Shanghai, and to provide reference for the perfection of Shanghai children’s medical insurance system. Methods The data of medical expense of 1 917 children with 6 types of serious diseases from 2008 to 2010 in three pediatric hospitals were collected, and the mean medical expense was analysed with non-parametric test. Results The true level of reimbursement of children with serious illness was relatively lower, with the average level of 69.88%, which was lower than the required value of 90%. Significant differences in reimbursement levels existed among different types of diseases, with the highest of 80.85% and the lowest of 47.18%. The reimbursement level of 6 types of serious diseases of Mutual Fund of Children Hospitalization was significantly lower than that of Basic Medical Insurance for Urban Residents (P=0.000). Conclusion There is room for improvement of Shanghai children's medical insurance system. The integration of existing Shanghai children's medical insurance is advised, and the financing and reimbursement level should be elevated, so as to enhance the level of childrens health insurance.