Punishment insensitivity characterizes individuals with callous-unemotional (CU) traits. This has been put forward as an explanation for their persistent conduct problems despite intervention. The purpose of the current study was to compare the emotional and behavioral responses to parent-implemented time-out within a behavioral parent training intervention between children with conduct problems who are high versus low on CU traits. Children (N = 87; M age = 4.88 years, SD = 1.32; 78% male) referred to a specialty clinic for the treatment of conduct problems were observed and coded during time-out, and their parents rated their conduct problem severity and CU traits using psychometrically robust measures. Children with conduct problems and high CU traits showed significantly more calm/neutral emotion and less negative emotion upon initial placement in time-out by parents, but did not engage in more negative behaviors or spend longer in time-out relative to children with conduct problems alone. After a minimum of three weeks of exposure to this form of parental discipline, most children complied with effective parental commands in that they did not require time-out for non-compliance during the fourth discipline-focused treatment session. Findings have implications for understanding why children with CU traits continue showing high levels of conduct problems post behavioral interventions, and they lend further support for the need to personalize treatment to their distinct needs.