Objectives On the basis of the multidimensional model of the caregiving process, this study aimed (a) to compare the levels of quality of life (QoL) and psychological problems of children with short stature and the levels of caregiving stress and QoL of their parents, between diagnostic, treatment, and current height deviation groups, and (b) to examine the direct and indirect links, via caregiving stress, between children's psychosocial functioning and their parents' QoL. Method The sample was collected in 5 European countries and comprised 238 dyads of 8‐ to 18‐year‐old children and adolescents with a clinical diagnosis of growth hormone deficiency or idiopathic short stature and one of their parents. The children completed self‐report measures of height‐related QoL (Quality of Life in Short Stature Youth Core Module) and psychological problems (Strengths and Difficulties Questionnaire); the parents reported on their own QoL (EUROHIS‐QOL‐8 Index) and caregiving stress (Quality of Life in Short Stature Youth Effects on Parents subscale). Results Children who were treated and who achieved normal height reported better QoL compared to those untreated and with current short stature. Parents of children with idiopathic short stature and current short stature presented greater caregiving stress than parents of children with growth hormone deficiency and achieved normal height. Children's better psychosocial functioning was indirectly associated with parents' better QoL, via less caregiving stress, and these links were invariant across diagnoses, treatment status, and current height deviation. Conclusions These results suggest that, along with growth hormone treatments, multidisciplinary interventions in paediatric endocrinology should be family‐centred, by targeting both the children's psychosocial functioning and the parents' stress, in order to improve individual and family adaptation. Key Practitioner Message Height‐related quality of life impairments and more internalizing problems in children and adolescents with short stature increase caregiving stress, which in turn has a negative impact on parents' quality of life, independently of patients' diagnosis, treatment status, and current height deviation. In addition to growth hormone treatment, multidisciplinary interventions in the context of paediatric short stature should target the children's and adolescents' psychosocial functioning, as well as provide the parents with cognitive and behavioural strategies to manage their child's physical, emotional, social, and behavioural problems. Caregiving stress should be routinely assessed and selected as a strategic intervention target for family‐centred psychosocial interventions aimed at promoting parents' adaptation outcomes (e.g., quality of life). Psychosocial interventions should prioritize the children and adolescents who had never been treated with growth hormone and who have current short stature, as well as the parents of children with idiopathic short stature and current short stature.