This chapter explores the origins of children’s adjustment, especially stable differences in externalizing behavior problems. Externalizing behavior can be seen as a dimensional array of adjustment styles, with aggressive and uncooperative behavior on one side and nonaggressive and cooperative behavior on the other side (Achenbach, 1982). Origins of externalizing adjustments can be traced to social-experiential processes, such as qualities of parenting (Bates, Bayles, Bennett, Ridge, & Brown, 1991; Patterson, Reid, & Dishion, 1992; Pettit, Bates, & Dodge, 1997). Its roots can also be traced to temperament. Temperament roots of adjustment can be traced not only to behavioral measures of temperament, but also to psychophysiological and genetic correlates of the behaviors and behavior patterns underlying both temperament and adjustment (Caspi, 1998; Kagan, 1998; Newman & Wallace, 1993; Reiss, 1997; Rothbart & Bates, 1998). Of course, almost any translation of early-appearing personality traits into adjustment must involve particular kinds of transactions with the environment across the span of development. This chapter, therefore, considers origins of adjustment in both parent-child transactions and child temperament, as well as in the interaction of these two factors.