In this study, the author examined whether family system functioning was associated with resilience in children exposed to negative environmental stress. In a sample of 55 low-income, urban families, greater differentiation of self among mothers predicted child competence--that is, better verbal and math achievement scores and lower aggression--after considering the effects of neighborhood violence and family life stress. No relations were observed between parent functioning and child academic self-concept. Furthermore, mothers' differentiation-of-self scores predicted children's cognitive skills, even after controlling for parent level of education. Implications, limitations, and directions for further research are discussed.