Background: Problems in understanding other people’s mental states may relate to distinct personality traits that are associated with early externalizing behavior. A distinction between theory of mind (ToM) and empathy has proven important in shedding light on the problems in understanding other minds encountered by children high on callous-unemotional (CU) traits and exhibiting impulsivity. The aim of this study was to investigate whether children’s early ToM and emotion understanding abilities predicted CU traits and impulsivity at age 10. A further aim was to explore whether the quality of the parent-child relationship very early in the development indirectly or directly predicted the children’s CU traits and impulsivity. Method: We examined whether ToM and empathy skills might differentially relate to personality traits associated with externalizing behaviors (i.e., impulsivity and CU traits). We examined these relations over time in a longitudinal cohort of 96 boys and girls using follow-back analyses, incorporating measures of maternal mind-mindedness (appropriate mind-related talk) to examine the possible role of parent-child interaction quality. Results: Appropriate mind-related talk indirectly predicted CU traits (at age 10 years) via its effect on children’s emotion understanding. ToM predicted impulsive/irresponsible traits, but ceased to be significant when controlling for externalizing behaviors. Conclusion: The present findings demonstrate that parents who remark appropriately on their infant’s mental states may help the child to understand emotions and may mold an empathic understanding of others, thereby preventing CU traits.