Mothers with histories of alcohol and drug addiction have shown greater difficulty parenting young children than mothers with no history of substance misuse. This study was the second randomized clinical trial testing the efficacy of Mothering From the Inside Out (MIO), a 12-week mentalization-based individual therapy designed to address psychological deficits commonly associated with chronic substance use that also interfere with the capacity to parent young children. Eighty-seven mothers caring for a child between 11 and 60 months of age were randomly assigned to receive 12 sessions of MIO versus 12 sessions of parent education (PE), a psychoeducation active control comparison. Maternal reflective functioning, representations of caregiving, mother-child interaction quality, and child attachment were evaluated at baseline and posttreatment and 3-month follow-up. Mother-child interaction quality was assessed again at 12-month follow-up. In comparison with PE mothers, MIO mothers demonstrated a higher capacity for reflective functioning and representational coherence at posttreatment and 3-month follow-up. At 12-month follow-up, compared to PE cohorts, MIO mothers demonstrated greater sensitivity, their children showed greater involvement, and MIO dyads showed greater reciprocity. As addiction severity increased, MIO also appeared to serve as a protective factor for maternal reflective functioning, quality of mother-child interactions, and child attachment status. Results demonstrate the promise of mentalization-based interventions provided concomitant with addiction treatment for mothers and their young children.