Several lines of evidence indicate that a parent's depression may be a significant health and adaptational risk factor for his or her children. In a controlled comparison, children of 133 depressed parents had significantly more symptoms of emotional, somatic, and behavioral impairment than did children of 135 nondepressed parents. Additional results suggest that the more negative milieu found among families of depressed parents was a mediator of the effects of parental depression. A social-environmental perspective helped to identify aspects of parents' functioning, family stressors, and resources that were related to children's health. Variations in these stressors and resources were strongly related to the probability of disturbance among children of depressed parents.