In this article, we summarize findings from the Stony Brook Temperament Study, which seeks to elucidate the early antecedents and pathways to later depressive and anxiety disorders. The study focuses on parents’ internalizing disorders and children's early temperament as distal risk factors that operate, in part, through biobehavioral reward and threat systems. We summarize findings linking parents’ emotional disorders and observations of children's early temperament to subsequent neural measures of children's affective processing. Next, we review findings showing that children's temperament and affective processing predict subsequent depression and anxiety. We also show that many of these associations are moderated by environmental factors, such as parenting and stress. Finally, we relate our findings to literature on the relationships of early temperament and affective processing to anxiety and depression in youth.