Regular engagement in sports has demonstrated positive effects on physical, psychological, and cognitive function among healthy children, adults, and adults with physical disabilities. Children with neuromotor impairment (NMI) are increasingly engaged in sports and sports-related activities. However, research on the effect of team sports on physical, psychological, and social functions in children with NMI is limited. The current review summarizes the effect of team sports on functioning in children with NMI. A comprehensive electronic search was conducted between 2001 and 2022 of the PubMed, Scopus, Web of Science, CINHAL, Google Scholar, and Cochrane Library databases. Seven studies reporting the effects of team sports on physical and cognitive function and psychosocial outcomes in children with NMIs were included. A total of 270 children in age group 4-17 received 45-90 minutes of supervised team sports 1-5 times a week. Team sports demonstrated improvement in physical, psychological, and social function such as transfer, mobility, and upper-extremity function; reduced hyperactivity, aggression, depression, and anxiety; improved attention; and improved social acceptance and social participation. The literature review revealed moderate- to high-quality evidence reporting the positive effects of team sports on physical, psychological and social functioning among children and adolescents with NMI. Team sports as an intervention or as adjunct therapy can be prescribed to children and adolescents with NMI.