Although the detrimental influence of parenting stress on child problem behavior is well established, it remains unknown how these constructs affect each other over time. In accordance with a transactional model, this study investigates how the development of internalizing and externalizing problems is related to the development of parenting stress in children aged 4-9. Mothers of 1582 children participated in three one-year interval data waves. Internalizing and externalizing problems as well as parenting stress were assessed by maternal self-report. Interrelated development of parenting with internalizing and externalizing problems was examined using Latent Growth Modeling. Directionality of effects was further investigated by using cross-lagged models. Parenting stress and externalizing problems showed a decrease over time, whereas internalizing problems remained stable. Initial levels of parenting stress were related to initial levels of both internalizing and externalizing problems. Decreases in parenting stress were related to larger decreases in externalizing problems and to the (stable) course of internalizing problems. Some evidence for reciprocity was found such that externalizing problems were associated with parenting stress and vice versa over time, specifically for boys. Our findings support the transactional model in explaining psychopathology.