This review examines the potential roles of parental self-efficacy (PSE) in parent and child adjustment and the role of parental cognitions in understanding behaviors and emotions within families. The areas in this review include parental competence and psychological functioning, as well as child behaviors, socio-emotional adjustment, school achievement, and maltreatment. There is strong evidence linking PSE to parental competence, and more modest linkage to parental psychological functioning. Some findings suggest that PSE impacts child adjustment directly but also indirectly via parenting practices and behaviors. Although the role of PSE likely varies across parents, children, and cultural–contextual factors, its influence cannot be overlooked as a possible predictor of parental competence and child functioning, or perhaps an indicator of risk. PSE may also be an appropriate target for prevention and intervention efforts. Limitations in the literature include measurement problems, variability in conceptualizations and definitions of the construct, and the lack of research exploring causality. Future research should focus on clarifying the measurement of PSE, studying potential bias in self-report of PSE, and utilizing experimental and longitudinal designs to untangle the issues of causal direction and potential transactional processes.