The Review of NSW Government Funding for Early Childhood Education, undertaken by Professor Deborah Brennan, recommended a review of the Department of Education and Communities' funding arrangements for preschool-age children with a disability or an additional need. This literature review has been undertaken to inform the review. This paper seeks to examine the evidence in the literature of the benefits for children with disability in inclusive childcare settings. Attention is then turned towards research on strategies to inform best practice for inclusive early childhood education. This paper finds that, while every child's experience will be different, overall: participation in inclusive settings is beneficial for many children with disability; for some children with disability, inclusive early childhood education and care will be just one type of useful early intervention to assist their development; engagement is a key measure of the benefit children with disability receive from early childhood education and care services; there are some strategies that inclusive preschools can use to ensure that children with disability are reaching their full potential. (author abstract)