AimThis study aims to investigate associations of formal childcare with maternal and child outcomes in a large sample of adolescent mothers.BackgroundForty percent of adolescent girls in Africa are mothers. Increasing evidence shows positive impacts of formal childcare use for adult women, but no known studies in the Global South examine associations for adolescent mothers and their children.MethodsWe interviewed 1046 adolescent mothers and completed developmental assessments with their children (n = 1139) in South Africa's Eastern Cape between 2017 and 2019. Questionnaires measured childcare use, maternal and child outcomes and socio‐demographic background variables. Using cross‐sectional data, associations between formal childcare use and outcomes were estimated in multivariate multi‐level analyses that accounted for individual‐level and family‐level clustering.ResultsChildcare use was associated with higher odds of being in education or employment (AOR: 4.01, 95% CIs: 2.59–6.21, p < .001), grade promotion (AOR: 2.08, 95% CIs: 1.42–3.05, p < .001) and positive future ideation (AOR: 1.58, 95% CIs: 1.01–2.49, p = .047) but no differences in mental health. Childcare use was also associated with better parenting on all measures: positive parenting (AOR: 1.66, 95% CIs: 1.16–2.38, p = .006), better parental limit‐setting (AOR: 2.00, 95% CIs: 1.37–2.93, p < .001) and better positive discipline (AOR: 1.77, 95% CIs: 1.21–2.59, p = .003). For the children, there were no differences in temperament or illness, but a significant interaction showed stronger associations between childcare use and better cognitive, language and motor scores with increasing child age (AOR: 5.04, 95% CIs: 1.59–15.96, p = .006).ConclusionsAdolescent mothers might benefit substantially from formal childcare, but causal links need to be explored further. Childcare use was also associated with improved parenting and better child development over time, suggesting positive pathways for children. At an average of $9 per month, childcare provisions for adolescent mothers may offer low‐cost opportunities to achieve high returns on health and human capital outcomes in Sub‐Saharan African contexts.