Repeatedly, parenting quality has been shown to affect children’s level of behavior problems during early childhood (e.g., Bayer, Sanson, & Hemphill, 2006; Shaw, Gilliom, Ingoldsby, & Nagin, 2003). However, the parent-child relationship exists within a broader social context (Bronfenbrenner, 1986). Therefore, social contextual stressors such as financial strain, neighborhood danger, and residential overcrowding may affect children’s adjustment through parenting. Based on The Family Stress model (Conger & Elder, 1994), the current study tests the theory that sensitive parenting mediates the relationship between these three environmental stressors (i.e., financial strain, neighborhood danger, and residential overcrowding) and children’s behavior problems from ages 2 to 4 years. Results did not support this hypothesis. Though, alternative analyses provided some support for interactive effects of sensitive parenting and neighborhood danger on children’s externalizing problems. When families experienced less neighborhood danger, sensitive parenting was associated with less externalizing problems.