Background:  Depression in fathers in the postnatal period is associated with an increased risk of behavioural problems in their offspring, particularly for boys. The aim of this study was to examine for differential effects of depression in fathers on children’s subsequent psychological functioning via a natural experiment comparing prenatal and postnatal exposure. Methods:  In a longitudinal population cohort study (the Avon Longitudinal Study of Parents and Children (ALSPAC)) we examined the associations between depression in fathers measured in the prenatal and postnatal period (measured using the Edinburgh Postnatal Depression Scale), and later behavioural/emotional and psychiatric problems in their children, assessed at ages 3½ and 7 years. Results:  Children whose fathers were depressed in both the prenatal and postnatal periods had the highest risks of subsequent psychopathology, measured by total problems at age 3½ years (Odds Ratio 3.55; 95% confidence interval 2.07, 6.08) and psychiatric diagnosis at age 7 years (OR 2.54; 1.19, 5.41). Few differences emerged when prenatal and postnatal depression exposure were directly compared, but when compared to fathers who were not depressed, boys whose fathers had postnatal depression only had higher rates of conduct problems aged 3½ years (OR 2.14; 1.22, 3.72) whereas sons of the prenatal group did not (OR 1.41; .75, 2.65). These associations changed little when controlling for maternal depression and other potential confounding factors. Conclusions:  The findings of this study suggest that the increased risk of later conduct problems, seen particularly in the sons of depressed fathers, maybe partly mediated through environmental means. In addition, children whose fathers are more chronically depressed appear to be at a higher risk of emotional and behavioural problems. Efforts to identify the precise mechanisms by which transmission of risk may occur should be encouraged to enable the development of focused interventions to mitigate risks for young children.