Background: Early diagnosis of children with fetal alcohol spectrum disorder (FASD) assists in implementing critical early support. The challenge lies in having a diagnostic process that enables valid and reliable assessment of domains of functioning in young children, with the added complexity that many children will also have co-occurring exposure to childhood adversity that is likely to impact these domains. Methods: The aim of this study was to test a diagnostic assessment of FASD in young children using the Australian Guide to the Diagnosis of FASD. Ninety-four children (aged 3 to 7 years) with confirmed or suspected prenatal alcohol exposure were referred to two specialist FASD clinics for assessment in Queensland, Australia. Results: There was a significant risk profile with 68.1% (n = 64) children having had contact with child protection services, and most children living in kinship (n = 22, 27.7%) or foster (n = 36, 40.4%) care. Forty-one percent of the children were Indigenous Australians. The majority (64.9%, n = 61) of children met criteria for FASD, 30.9% were classified as “At Risk” for FASD (n = 29), and 4.3% received no FASD diagnosis (n = 4). Only 4 (4%) children were rated as severe for the brain domain. Over 60% of children (n = 58) had two or more comorbid diagnoses. Sensitivity analyses indicated that the removal of comorbid diagnoses in the Attention, Affect Regulation, or Adaptive Functioning domains resulted in a change in 7 of 47 cases (15%) to an “At Risk” designation. Conclusions: These results highlight the complexity of presentation and the extent of impairment in the sample. The use of comorbid diagnoses to substantiate a “severe” designation in specific neurodevelopmental domains raises the question of whether there were false-positive diagnoses. The complexity of determining causal relationships between exposure to PAE and early life adversity on developmental outcomes continues to be a challenge in this young population.