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Parenting behaviors influence clinical depression among youth, but little is known about the developmental processes that may account for this association. This study investigated whether parenting is associated with the onset of clinical depression and depressive symptoms through negative cognitive style, particularly under conditions of high exposure to stressors, in a community sample of children and adolescents (N = 275; 59% girls). Observational methods were used to assess positive and negative parenting during a laboratory social-evaluative stressor task. Depressive symptoms and clinical depressive episodes were repeatedly assessed over an 18-month prospective follow-up period. Results supported a conditional indirect effect in which low levels of observed positive parenting during a youth stressor task were indirectly associated with an increased likelihood of experiencing an episode of depression and worsening depressive symptoms over the course of the study through youth negative cognitive style, but only for youth who also experienced a high number of peer stressors. These findings elucidate mechanisms through which problematic parenting may contribute to risk for the development of clinical depression during the transition into and across adolescence. Implications for depression interventions are discussed.