This study aimed to examine: (1) the relationship between parental psychopathology and child psychopathology in military families and (2) parenting sense of competence as a mediator of the relationship between veteran psychopathology and child psychopathology. As part of their standard clinical evaluations, 215 treatment-seeking veterans who reported having a child between the ages of 4 and 17 were assessed for psychopathology (posttraumatic stress disorder, depression, anxiety, and stress), their sense of competence as a parent, and their child's psychopathology (internalizing, externalizing, and attentional symptoms). A path analysis model examining parenting sense of competence as a mediator of the relationship between veteran psychopathology and child psychopathology showed significant indirect effects of veteran depression on all child psychopathology outcomes via parenting sense of competence. Parental sense of competence may be a critical mechanism linking veteran depression and child psychopathology, and may therefore be an important target for intervention.