The current study explores the construct validity of the standard Strengths and Difficulties Questionnaire (SDQ) for Aboriginal children living in urban communities in New South Wales, Australia. Parent report SDQ data from the first 717 Aboriginal children aged 4–17 years who participated in the baseline survey of the Study of Environment on Aboriginal Resilience and Child Health were analysed. The overall construct validity of the SDQ in our sample was acceptable but not “good.” The internal consistency reliability was excellent overall and good for all subscales with the exception of peer problems, a concept that may have a different significance for urban Aboriginal parents. Removing the peer relationships subscale, however, did not improve the fit of the model. The convergent validity of the SDQ was good. The prosocial behaviours scale and both the peer and conduct problems scales were highly correlated suggesting Aboriginal parents conceptualise these differently and that prosocial behaviours may be considered a key indicator of well‐being for Aboriginal children. Overall, the SDQ is a promising tool for urban Aboriginal children in New South Wales. Those working with Aboriginal young people should focus on the SDQ total difficulties score and limit their reliance on the peer relationships subscale.