Background For decades, parental self‐efficacy (PSE), or parents' belief in their ability to influence their child in a healthy and success‐promoting manner, has been understood as a key factor in promoting healthy functioning for parents and their children. In that time, an extensive collection of research examining the specific impact of PSE on parents and their children has developed. However, to the authors' knowledge, no comprehensive and systematic review of the outcomes linked to this factor exists, and the two most closely related non‐systematic reviews were published over 10 years ago. Methods Therefore, by utilizing an iteratively optimized set of search terms applied across four databases, the current review sought to systematically collect, synthesize, and present the extant literature concerning the role of PSE in parent and child well‐being. Results This search strategy yielded a total of 115 studies, the results of which were organized into three broad thematic categories relating to: the parent and child relationship, parental mental health, or child development. Conclusions These results recapitulate the clinical relevance of PSE, and provide an updated and comprehensive understanding of both the role PSE plays in the welfare of parents and children, as well as the gaps in the literature as it currently stands.