Cortisol output in response to emotion induction procedures was examined at child age 24 months in a prospective longitudinal sample of 1,292 children and families in predominantly low-income and nonurban communities in two regions of high poverty in the United States. Multilevel analysis indicated that observed emotional reactivity to a mask presentation but not a toy removal procedure interacted with sensitive parenting to predict cortisol levels in children. For children experiencing high levels of sensitive parenting, cortisol output was high among children exhibiting high emotional reactivity and low among children exhibiting low emotional reactivity. For children experiencing low levels of sensitive parenting, cortisol output was unrelated to emotional reactivity. [Members of the Family Life Project Investigators contributed to the writing of this document. These include: Lynne Vernon-Feagans, Martha Cox, Clancy Blair, Peg Burchinal, Linda Burton, Keith Crnic, Ann Crouter, Patricia Garrett-Peters, Mark Greenberg, Maureen Ittig, Stephanie Lanza, Roger Mills-Koonce, Debra Skinner, Cynthia Stifter, and Michael Willoughby.]