Research has shown that offspring of depressed caregivers areat increased risk for maladaptive development and emotional difficulties. Specifically, infantsand toddlers of depressed mothers have been shown to evidence higher percentages of insecureattachments and more behavioral difficulties than offspring of nondisordered mothers. However,even in studies that reveal significant differences between children of depressed andnondepressed caregivers, a substantial number of children with depressed caregivers do notevidence dysfunction. Such findings have resulted in increased attention to the broader socialcontext in which children of depressed mothers develop. This investigation examined the directinfluences of maternal depression on child development, as well as the role of contextual risksthat may be particularly heightened in families with depressed parents. Toddlers with depressedmothers evidenced significantly more insecure attachments than did toddlers with nondisorderedmothers, and this difference was not accounted for by contextual risk. In predicting childbehavior problems, contextual risk was found to mediate the relation between maternaldepression and child behavior problems. Father-report data on child behavior corroborated themother report data. Results are discussed in terms of the diversity of functioning in offspring ofdepressed caregivers that can be attributed to varied levels of contextual risk accompanyingdepression.