It is known that residential schools traumatized their students. They ripped their students from their families and put them in hostile environments. The schools left their students with many physiological challenges, such as anger, anxiety, low self-esteem and depression to post-traumatic stress disorder and high rates of suicide. This left many survivors struggling in day to day life. In a national survey conducted between 2008 and 2010, members of First Nations communities identified managing substance use as the number-one challenge for community wellness, (Menzies, 2020). This had a negative effect on the individual students, but it also affected the generations to come after them. Because residential schools had no examples of loving families, many survivors are left not knowing how to raise their own kids. The effect of this can be observed in the high rates of family violence and domestic partner abuse. Indigenous children only represent 8% of the children under the age of 14 in Canada, they comprise more than 52 per cent of children in the care of child welfare authorities.

A research model on intergenerational trauma found that because children learn from their environment around them, when children are abused, neglected, and stressed in their home environments they are unable to develop certain coping skills or strategies. When experiencing these factors in their own home life from their parents and immediate family members, these negative behaviours are replicated, and the cycle of trauma continues. This is worsened when the children experience geographic isolation like reserves and social marginalization. This is due to the fact that other parenting models are then not experienced. Therefore the cycle remains unchanged.

A new theory suggests that there is also a biological risk in intergenerational trauma which can include "toxic stress" caused by a child's environment. "Toxic stress" can influence a child's brain development, caused by unusual levels of cortisol, dopamine or serotonin. Which can affect a child's capacity to process and cope with stressful situations. As well, there are epigenetic theories that propose that maternal stress can affect a child's antenatal development, which can affect their genes. These theories suggest that genetic conditions can predispose an individual's negative response to stress. These genetic conditions have the ability to be passed on through generations, resulting in intergenerational trauma.