A variety of family processes have been hypothesized to mediate associations between income and young children's development. Maternal emotional distress, parental authoritative and authoritarian behavior (videotaped mother-child interactions), and provision of cognitively stimulating activities (Home Observation for Measurement of the Environment [HOME] scales) were examined as possible mediators in a sample of 493 White and African American low-birth-weight premature infants who were followed from birth through age 5. Cognitive ability was assessed by standardized test, and child behavior problems by maternal report, when the children were 3 and 5 years of age. As expected, family income was associated with child outcomes. The provision of stimulating experiences in the home mediated the relation between family income and both children's outcomes; maternal emotional distress and parenting practices mediated the relation between income and children's behavior problems.