Although growing numbers of parents share the physical custody of their children after family dissolution, empirical studies on the mechanisms through which post-separation care arrangements may affect parental well-being remain scarce. To fill this lacuna, the present study not only investigated the relationship between post-separation care arrangements and the life satisfaction of resident parents, but also whether the quality of co-parenting and the frequency of interparental conflict—two stressors associated with family dissolution—could explain this relationship. Based on data from the Family Models in Germany (FAMOD) study, structural equation models were estimated for an analytical sample of 1104 resident parents practicing either sole physical custody (SPC) or joint physical custody (JPC). The findings showed that parents with JPC experienced, on average, more life satisfaction than their counterparts with SPC. However, after considering the quality of co-parenting and the frequency of interparental conflict, the study found that the direct relationship between post-separation care arrangements and life satisfaction was no longer significant. Instead, practicing JPC was significantly related to both better co-parenting and fewer interparental conflicts, while the latter two factors were positively related to life satisfaction. In sum, this study showed that framework conditions, specifically elements of the interparental relationship, are more important factors to consider when investigating parents’ post-separation well-being than the type of care arrangement practiced. However, the role of selection processes in explaining these associations remains uncertain, including the question of whether practicing JPC actually enhances the quality of the interparental relationship.