Parental incarceration is a risk factor for a variety of adverse health and social outcomes among youth, including an increased risk of mental health problems. Yet, little information exists on what protects youth who have been impacted by parental incarceration from experiencing negative outcomes. Developmental assets, including empowerment, positive identity, and social competency, are constructs that have been shown to support positive youth development and protect youth from experiencing adverse outcomes in the presence of risks. However, there is a dearth of research on developmental assets and their protective potential among this specific population. Self-reported developmental assets were compared among youth who reported having a parent currently or formerly incarcerated, or no history of parental incarceration using a statewide cross-sectional survey of adolescents (N = 113,281). A series of logistic regressions were then performed including interaction terms, which assessed whether developmental assets served as protective factors for depressive symptoms and suicidal ideation. Developmental asset scores and internalizing symptoms varied significantly by youths’ parental incarceration status and higher levels of developmental assets moderated the associations between parental incarceration and internalizing symptoms. Development assets were protective for all youth in this study, but the effect size was not as strong for youth with currently incarcerated parents. Promoting the developmental assets of youth affected by parental incarceration may reduce the potential for adverse mental health outcomes among this population.