Children with chronic health conditions face an increased risk for mental health issues compared to their healthy peers. These mental health conditions can negatively impact disease management and medical outcomes. Digital mental health interventions (DMHIs), such as computerized Cognitive Behavioral Therapy and conversational AI, may help address this need. This paper describes an in-progress DMHI using generative AI called Starfly. Starfly connects children with chronic illness with peers to facilitate positive interactions without stigma. The app offers a secure platform for social support and community building among young people managing chronic illness. By leveraging AI and thoughtful design, Starfly aims to promote mental well-being and improve disease outcomes in this vulnerable population.