The number of incarcerated mothers is increasing significantly. There are many risks and harmful consequences for the children of the incarcerated mothers. In Iran, there is not a systematic research and information on these children. Therefore, this study aims at utilizing a qualitative methodology, to investigate the living conditions of this group, based on their mothers' narratives. The grounded theory approach of Strauss and Corbin 1998 was used to analyze the consequences of the incarceration of mothers on the living conditions of children. The participants of the study include 16 incarcerated mothers who were on leave. The data were gathered via in-depth and open-ended interviews. During the coding process six categories were extracted which describe the living condition of the children: behavioral, mental, and physical challenges; escape; experience of poverty and destructive economy of family; dilemma of caring; mother-child visitation; difficulties suicide and mother's emotional challenges. Children of incarcerated mothers encountered challenges such as mental, behavioral and economic. Many of them escape from home and school. Mothers prefer informal caring of their children than formal. The mother-child visits include some difficulties such as long distance, transportation costs, and undesirable visiting atmosphere. Mothers pointed to their deep psychological problems and sometimes committing suicide due to the separation of their children.