A child's social and emotional wellbeing is integral to their overall health, development and wellbeing. Children with high levels of social and emotional wellbeing are more likely to successfully negotiate physical, intellectual and social challenges during childhood and adolescence. This report describes the process of developing a Children's Headline Indicator to measure social and emotional wellbeing. It presents research evidence on the links between social and emotional wellbeing and children's health, development and wellbeing outcomes; assesses potential indicators and data sources; and recommends an indicator of social and emotional wellbeing for Australian children.