Objectives. We examined the relationship between parents’ experiences of racism and children’s well-being and the influence of the residential neighborhood characteristics on this relationship. Methods. African American families were recruited from Baltimore neighborhoods. Parental measures included racism experiences and coping. Neighborhood measures included demographic characteristics, social cohesion, and social climate. Children’s mental health was assessed with the Child Behavior Checklist. Analysis was performed with multilevel modeling. Results. Parents who denied experiences of racism also reported higher rates of behavior problems among their preschool-aged children. For families living in neighborhoods characterized by fear of victimization, parents who actively coped with racism experiences by confronting the person involved or taking some sort of action in response to racism reported lower rates of anxiety and depression for their preschool-aged children. Conclusions. Experiences of and responses to racism among African American parents have important effects on the well-being of their young children.