The film, "The Girl, the Mother and the Demons," revolves around 8-year-old Ti and her mentally disturbed mother. The story is based on the book Osten wrote about growing up with her own mom who battled mental illness.
In the movie, the mother is haunted by demons that her daughter can't see and in one scene they urge the mother to kill her daughter and hang herself.
Sweden's Media Council, which sets the age limits for public screenings of films, felt that scene, along with another one, were too much for children under the age of 15 to watch.
Osten, however, dismisses their ruling and has formally appealed it with the council.
"I've been working 40 years with this. I know my audience very well," she tells Radio Sweden. "There's no violence in the film. There's no blood, there's no shooting, there's no killing, there's no intercourse. This is purely that the adults here are getting worried because psychotic illness is still a taboo."
The filmmaker says she screened the film herself to children as young as 7 and believes the film is appropriate for that age.
Osten adds that she doesn't deny the movie is frightening at times (she describes it as a "horror story" or "a thriller") but she says shielding kids from it is the wrong thing to do.
"Reality is so really frightening for a lot of people," she says. "While they can't control the media, television, interactive games ... they can only control a small scale of works" such as her film and others.
The movie will have it's premiere in Sweden on April 15.