This study tests a model of children's emotion regulation (ER) as a moderator of the link between maternal depression and child internalizing problems. Participants were 78 children (ages 4 to 7), including 45 children of mothers with a history of childhood-onset depression (COD) and 33 children of mothers who had never been depressed. ER was assessed observationally during a laboratory mood induction. ER behaviors were empirically reduced into 3 categories: (a) negative focus on delay, (b) positive reward anticipation, and (c) behavioral distraction. Linear mixed models indicated that positive reward anticipation moderated the effects of maternal COD on children's internalizing problems, particularly if mothers had current depressive symptoms. Findings suggest that generating positive affect in the face of a potential frustration may be a protective ER strategy for children at risk for depression.