The biological mechanisms involved in fear transmission within families have been scarcely investigated in humans. Here we studied (1) how children acquired conditioned fear from observing their parent, or a stranger, being exposed to a fear conditioning paradigm, and (2) the subsequent fear extinction process in these children. Eighty-three child-parent dyads were recruited. The parent was filmed while undergoing a conditioning procedure where one cue was paired with a shock (CS + Parent) and one was not (CS −). Children (8 to 12 years old) watched this video and a video of an adult stranger who underwent conditioning with a different cue reinforced (CS + Stranger). Children were then exposed to all cues (no shocks were delivered) while skin conductance responses (SCR) were recorded. Children exhibited higher SCR to the CS + Parent and CS + Stranger relative to the CS −. Physiological synchronization between the child’s SCR during observational learning and the parent’s SCR during the actual process of fear conditioning predicted higher SCR for the child to the CS + Parent. Our data suggest that children acquire fear vicariously and this can be measured physiologically. These data lay the foundation to examine observational fear learning mechanisms that might contribute to fear and anxiety disorders transmission in clinically affected families.