A diagnosis of cancer is a very stressful event for the patients and their families. Patients, partners and other family members can suffer from clinical levels of depression and severe levels of anxiety and stress reactions. The similarity in levels of distress between patients and partners and patients and offspring suggests that there are common factors that impact on families' distress levels. The current study examined levels of depression and anxiety in newly diagnosed adult patients (n = 48) and their adult relatives (n = 99). Family functioning and patients' illness characteristics were identified as factors that might impact on families' depression and anxiety. Results from multilevel models indicated that family functioning was important. Families that were able to act openly, express feelings directly, and solve problems effectively had lower levels of depression. Direct communication of information within the family was associated with lower levels of anxiety. Aside from differences anxiety due to cancer type, patients' illness characteristics appear to be risk factors in patients' but not relatives' depression and anxiety. The results from the current study suggest that researchers and clinicians need to be family-focused as cancer affects the whole family, not just the patient.