Hurricane Katrina dramatically altered the level of social and environmental stressors for the residents of the New Orleans area. The Family Stress Model describes a process whereby felt financial strain undermines parents' mental health, the quality of family relationships, and child adjustment. Our study considered the extent to which the Family Stress Model explained toddler-aged adjustment among Hurricane Katrina affected and nonaffected families. Two groups of very low-income mothers and their 2-year-old children participated (pre-Katrina, n = 55; post-Katrina, n = 47). Consistent with the Family Stress Model, financial strain and neighborhood violence were associated with higher levels of mothers' depressed mood; depressed mood was linked to less parenting efficacy. Poor parenting efficacy was associated to more child internalizing and externalizing problems. (Contains 2 figures and 3 tables.)