Increasing research suggests that elevations in the cortisol awakening response (CAR), the natural increase of cortisol 30 to 40 minutes after waking, may serve as a vulnerability marker for depression. However, existing studies have focused on adolescence and adulthood; very little is known about the CAR in early childhood and the factors that are associated with it. The current study aimed to examine the validity of the CAR as a potential early-emerging vulnerability marker for depression in a sample of preschool-age children. We examined associations between the CAR and two well-established risk factors for depression: maternal psychopathology and early child temperament (high negative emotionality (NE) and/or low positive emotionality (PE)). The sample consisted of 146 preschool-age children, of whom 71 (49.3%) had a biological mother with a history of depression and 65 (45.5%) had a biological mother with a history of anxiety. To assess the CAR, salivary cortisol samples were collected from the child upon waking, 30 and 45 minutes post-waking on two weekdays. Children’s CAR was examined as the total volume of cortisol secreted (AUCg) and the total increase in cortisol (AUCi) across waking. Evening cortisol was collected 30 minutes before bedtime. Child temperament was assessed using observational laboratory measures. Maternal depression and anxiety were assessed with clinical interviews. Associations with children’s CAR, as indicated by AUCg or AUCi, appeared to be specific to maternal current psychopathology and symptoms of anhedonia. Additionally, we observed significant interactions for both maternal lifetime and current depression and anxiety, in combination with child NE and PE, on elevated evening cortisol levels and flattened diurnal cortisol rhythms, indicating altered patterns of basal cortisol activity in offspring. Our study contributes to the limited but growing knowledge on the development of the CAR in preschool age children and as a marker of early risk. Findings suggest that there is a complex interplay between familial risk, affective vulnerability, and their joint effects on neuroendocrine dysfunction in young children, and highlight the need for future research to examine which aspects of the early diurnal rhythm predict the emergence of later depressive illness.