PurposeLiterature has shown that the intergenerational transmission of cognitive abilities is stronger for children raised in more advantaged environments. However, there has never been an empirical investigation of this pattern in China. This study examines differences in the intergenerational transmission of cognitive capabilities among mothers and young children in urban and rural subpopulations in China and investigates whether these differences are driven by differences in parental investment in the home environment.Design/methodology/approachData collected from randomly selected 6- to 36-month-old babies and their mothers in a Northwestern province in China was used. Child capabilities were assessed by the Bayley Scales of Infant and Toddler Development (3rd edition). Maternal intelligence quotient (IQ) scores were assessed with the Raven’s Progressive Matrices test. The non-parametric regression methods were used to construct the factor scores of child capabilities. The ordinary least squares (OLS) models were employed to investigate the relations between child cognition, maternal IQ and parental investment.FindingsIn urban households, where most children are raised in a positive home environment, child cognitive scores are strongly correlated with maternal IQ. In rural households, where parental investments are lower and more variable, child cognitive scores are not significantly correlated with maternal IQ but are predicted by differences in parental investments in a cognitively stimulating home environment.Originality/valueThis study provides a unique contribution by utilizing rural–urban disparities in China as a unique natural experiment to investigate differences in the transmission of cognitive capabilities across socioeconomic status (SES). It also provides the first empirical evidence of SES differences in the intergenerational transmission of cognitive capabilities in a developing country. This study reveals that intergenerational mother–child cognition associations are disrupted by poor parental investment in rural households but not in urban households.