Background: Involving parents in mental health treatment services can empower parents to manage their child’s illness. We conducted this study to develop a tool to assess parental care for children with mental illness. Materials and Methods: The present study was conducted in five phases that included in-depth interviews with parents in the outpatient department (OPD), focus group discussions (FGDs) with parents in an in-patient setting, and with a multidisciplinary team, item development, and the assessment of psychometric properties of the tool. Results: Parental care for children with mental illness (PCCMI) has 50 items derived from a thematic analysis of in-depth interviews of 31 parents and 2 FGDs with eight parents admitted at CPC and eight mental health professionals experienced in child and adolescent psychiatry. It is a 5-point Likert scale. The tool showed a high item-level Content Validity Index (I-CVI range: 0.8–1.0) and a high Scale Content Validity Index (S-CVI = 0.91). The test–retest method was used to calculate reliability. A total of 38 parents were included in the test–retest method. The mother and father’s mean age and standard deviation (SD) scores were 39.7 ± 5.8 and 45.1 ± 4.9, respectively. Most parents’ education level is above graduation (mothers: 86.8% and fathers: 86%). Around 63% of mothers were housewives and had normal pregnancies. The single measure two-way mixed absolute agreement intraclass correlation coefficient (ICC) value for 38 subjects was 0.96 with a 95% confidence interval (CI: 0.90–0.95), indicating high reliability. Conclusion: PCCMI has high I-CVI and S-CVI and good ICC test–retest reliability. This tool will help mental health professionals in the formal assessment of parental care for children with mental illness and provide the intervention to address issues related to the same.