Youth in urban environments are exposed to community violence, yet some do well and continue on a positive developmental trajectory. This study investigated the relationships between lifetime community violence exposure (including total, hearing about, witnessing, and victimization), family functioning, and positive youth development (PYD) among 110 urban youth ages 10-16 years (54% female) using a paper and pen self-report survey. This cross-sectional study was part of an interdisciplinary community-based participatory research effort in West/Southwest Philadelphia. Almost 97% of the sample reported some type of community violence exposure. Controlling for presence of mother in the home and presence of father in the home, separate linear regression models for PYD by each type of community violence exposure indicated that gender and family functioning were significantly associated with PYD. None of the types of community violence exposure were significant in the models. Significant interactions between gender and presence of mother in the home and gender and family functioning helped better explain these relationships for some of the types of community violence exposure. Presence of mother was associated with higher PYD for girls, but not for boys. Boys with poor family functioning had lower PYD than girls with poor family functioning. This study helps to better delineate relationships between CVE and PYD by adding new knowledge to the literature on the role of family functioning. Points of intervention should focus on families, with attention to parental figures in the home and overall family functioning.