Mothers' distress is a correlate of their children's elevated behaviour problems and symptoms. Parenting practices have been shown to mediate these associations, but few studies have observed parenting or focused on parents at risk of child abuse. In this study of 269 high‐risk mothers and their young children (M = 4.2 years), structural equation modelling was used to test associations between mothers' distress and child externalizing and internalizing symptoms. Associations were expected to be partly indirect via mothers' observed low sensitivity, and child gender was expected to moderate associations. Also, mothers' child abuse risk was examined as a unique correlate of sensitivity and children's symptoms, and a moderator of associations of distress with sensitivity and symptoms. Associations showed a pattern of gender‐moderated mediation with the link between mothers' distress and internalizing mostly direct for boys, and equally direct and indirect via sensitivity for girls. The association of mothers' distress with externalizing was mostly direct for boys and girls. Mothers' child abuse risk was not uniquely associated with sensitivity or symptoms and did not moderate any associations. There were no differences in model paths between mothers referred from child welfare/mental health compared with other sources or self‐referred. Copyright © 2013 John Wiley & Sons, Ltd.