In light of evidence suggesting that maternal adaptation may impact early child emotional development, this study investigated the interactive effects of maternal psychosocial maladjustment and maternal sensitivity on child internalizing symptoms, with the aim of investigating the potentially protective function of maternal sensitivity. Families (N = 71 to 106 across measures, with gender spread almost evenly: number of boys = 31 to 51 across measures) took part in four assessments between child ages 1 and 3 years. Mothers completed measures of parental stress, psychological distress, and marital satisfaction when their children were between 12 and 15 months. A composite score of maternal psychosocial maladjustment was derived from these measures. Maternal sensitivity was rated by trained observers at 12 months following a home visit. Child internalizing symptoms were assessed by both parents when the child was 2 and 3 years old. Hierarchical regressions revealed that increased maternal psychosocial maladjustment was related to more internalizing symptoms in children, however only among children of less sensitive mothers. In contrast, children of more sensitive mothers appeared to be protected. This was observed with maternal reports at 2 years, and both maternal and paternal reports at 3 years. These results suggest that young children may be differentially affected by their parents’ emotional adjustment, while highlighting the pivotal protective role of maternal sensitivity in this process.