Social‐Emotional competencies evolve early in life. For example, early emotion regulation is learned primarily in the context of mother–child interaction, which may allow for maternal influences to shape children's social‐emotional development. The aim of the current study was to longitudinally examine maternal determinants of children's early social‐emotional development in a community‐based sample of first‐time mothers (N = 61, aged 22–39 years). Specifically, we used structural equation modeling to examine how maternal emotion regulation difficulties and subclinical depression directly and indirectly, through sensitivity and postnatal bonding, assessed at 6 to 8 months predicted child outcomes at 12 to 16 months. We found that mothers’ sensitivity predicted fewer social‐emotional and behavioral problems and that stronger bonding predicted fewer problems and more social‐emotional competencies. Emotion regulation difficulties were significantly associated with depressive symptoms; yet, when accounting for shared variances, both factors differentially predicted less positive child outcomes such that more difficulties indirectly, through poorer bonding, predicted greater delay in competencies, and more symptoms indirectly, through less sensitivity, predicted more problems. Current findings underline the significance of maternal factors impacting the quality of mother–child interaction for children's positive development. Potential implications for early prevention programs to support children who are otherwise at risk for negative emotional outcomes due to mothers’ emotional state postpartum are discussed.