This study examined emotional and behavioral symptoms of children in Shanghai, China whose parents and/or grandparents had experienced potentially traumatic events (PTE). The sample was comprised of 2282 first-grade children who were rated by their teachers and parents. We compared children whose parents reported if they themselves and/or their parents had experienced a PTE, with children whose parents and grandparents had not been exposed to a PTE. We also paid attention to parental attributes including depression, overall physical health, and evaluation of the parent–child and marital relationships in order to determine their potential influence in the link between PTE exposure in a previous generation and children’s emotional and behavioral symptoms. Ordinary least square regression results indicate that children whose parents reported that they or one of their parents had PTE exposure had significantly higher levels of externalizing and internalizing behavior with effect sizes (Cohen’s d) ranging from 0.18 to 0.45. Parental depression, physical health symptoms, negative description of the parent–child relationship, and marital conflict were associated with heightened levels of children’s internalizing and externalizing behaviors and accounted for some of the links between parental PTE exposure and children’s symptoms.