Objective: Although social maladjustment appears to be common among abused children, negative outcomes are not inevitable. This investigation was designed to determine whether ethnicity and features of the parenting context predicted children's social adjustment, and whether the strength and direction of these relations differed for abused and nonabused children. Method: Participants included 78 physically abused and 75 demographically matched nonabused children and one of their parents. Observations of parenting were used to measure parental sensitivity, and parent self-reports of depression were obtained using the SCL-90-R. Children's peer social adjustment was measured by teacher report. Results: Using regression analysis, we tested whether each potential protective or vulnerability factor interacted with abuse status in prediction of social adjustment. Results indicated main effects of ethnicity and sensitivity for prosocial behavior, and a main effect of sensitivity for aggression. In addition, there was a significant interaction of ethnicity and abuse status for aggression such that there was a significant difference between abused and nonabused European American children but not between abused and nonabused African American children. Conclusions: Findings indicate that risk for aggressive behavior among abused children might be culturally specific rather than universal. In addition, results point to beneficial effects of parental sensitivity for maltreated children. (Contains 3 tables.)