Research suggests that disruptions in early caretaking can have long-term effects on the hypothalamic–pituitary–adrenal (HPA) axis, which mediates the stress response. Children of depressed mothers are at increased risk for developing internalizing problems in part because of disruptions in their caretaking environment. The present study investigated whether children of depressed mothers exhibit elevated salivary cortisol levels. Salivary cortisol samples were collected from 45 7- to 8-year-old children of mothers with a history of depression and 29 children of nondepressed mothers. Samples were collected soon after arrival to the laboratory and after a mild laboratory stressor and at home after wakeup and before bedtime. Children who had elevated levels of internalizing symptoms and whose mothers had a history of depression showed elevated laboratory baseline cortisol levels. Children who were reported to have clinically significant internalizing symptoms were also more likely to show an elevated stress response to a mild laboratory stressor. When the longitudinal history of maternal depression was examined, maternal depression during the child's first 2 years of life was the best predictor of elevations in baseline cortisol at age 7 years. This study provides evidence that internalizing symptoms exist in conjunction with a more reactive hormonal stress system in children of depressed mothers. The results also provide preliminary evidence that exposure to maternal depression in the first 2 years of life may be related to children's cortisol levels later in life.