This was a study of the prevalence of working children and child labor in the production process of the export-oriented handmade carpet industry in Pakistan in 2009-2010. The study included wool-processing activities (supplying the yarn) as well as carpet production and finishing. This study adhered to international standards by considering all persons younger than 18 years of age to be children. The methodology included preliminary qualitative research, development of a national sampling frame, and a large-scale cross-sectional sample survey of factory-based and household-based production. The survey estimated that 646 factories and 39,366 households were engaged in Pakistan’s carpet industry, employing a total workforce of 105,915 usual workers, of whom 33,413 (31.5 percent) were children. Even though more than 33,000 children were found to be working in the carpet industry, the number and prevalence of working children and the size of the total industry were much smaller than earlier estimates. Almost all (96.3 percent) the children working in the carpet industry in Pakistan were working in households. Almost all children working in carpet households and carpet factories (91.7 percent and 94.0 percent, respectively) were living with their parents. More than half (53.6 percent) of the child carpet workers were girls, but the factory-based children were predominantly (78.1 percent) boys. The study estimated that all (100 percent) children working in the carpet industry in Pakistan were engaged in hazardous work (child labor). In addition, the data showed indications that four- fifths (81.1 percent) of the children worked excessive hours. There were strong indications that many children working in the carpet industry and their families were in forced/bonded labor, as one-fifth of the households were indebted, and two-thirds of the indebted households reported having difficulties repaying their debts. Pakistan’s labor standards defined the industry as hazardous and established 14 years of age as the minimum legal age to work in hazardous work or in factories. Since half (50.1 percent) of the children working in the industry and 56.6 percent of the factory-based child workers were below 14 years of age, their employment was in breach of Pakistani law.