Perceived parental stress has been consistently shown to negatively impact child functioning and ability to cope with stressful situations. Utilizing data from the parenting our children to excellence program, the current study examined the relationships among perceived parenting stress, coping competence, and school readiness in a sample of African American and Caucasian parents of preschool children (age 3–6) considered at high risk for child physical abuse. We hypothesized that child competence would mediate the relation between perceived parental stress and children’s school readiness. We tested a longitudinal latent variable model and found that parent-reported (but not teacher-reported) child competence mediated the relation between perceived parental stress and school readiness, controlling for family income, parent’s education level, and child’s sex. These results suggest that parents’ perceived stress plays a role in both how they view their children’s competence and how children perform academically.