The relationship between reading difficulties (RD) and psychosocial problems is well-documented; however, less is known about possible protective factors. This study explored the possible protective functions of two socio-cognitive abilities (theory of mind and emotion understanding) in children with RD. Participants were 21 children with RD, and a matched group of 21 typically-achieving peers aged 9-11 years. Psychosocial problems were assessed using the Strengths and Difficulties Questionnaire. Faux Pas Stories and the Diagnostic Assessment of Nonverbal Accuracy provided measures of theory of mind and emotion understanding respectively. Confirming previous findings, RD were significantly correlated with higher levels of psychosocial problems. Moreover, lower theory of mind scores predicted higher levels of psychosocial problems. Consistent with our hypothesis, emotion understanding moderated the link between RD and psychosocial problems. These findings provide evidence of the possible protective functions of socio-cognitive abilities for children with RD, and highlight the need for further investigation.