Parenthood is central to the personal and social identity of many people. For individuals with psychotic disorders, parenthood is often associated with formidable challenges. We aimed to identify predictors of adequate parenting among parents with psychotic disorders. Data pertaining to 234 parents with psychotic disorders living with dependent children were extracted from a population-based prevalence study, the 2010 second Australian national survey of psychosis, and analysed using confirmatory factor analysis. Parenting outcome was defined as quality of care of children, based on participant report and interviewer enquiry/exploration, and included level of participation, interest and competence in childcare during the last 12 months. Five hypothesis-driven latent variables were constructed and labelled psychosocial support, illness severity, substance abuse/dependence, adaptive functioning and parenting role. Importantly, 75% of participants were not identified to have any dysfunction in the quality of care provided to their child(ren). Severity of illness and adaptive functioning were reliably associated with quality of childcare. Psychosocial support, substance abuse/dependence and parenting role had an indirect relationship to the outcome variable via their association with either severity of illness and/or adaptive functioning. The majority of parents in the current sample provided adequate parenting. However, greater symptom severity and poorer adaptive functioning ultimately leave parents with significant difficulties and in need of assistance to manage their parenting obligations. As symptoms and functioning can change episodically for people with psychotic illness, provision of targeted and flexible support that can deliver temporary assistance during times of need is necessary. This would maximise the quality of care provided to vulnerable children, with potential long-term benefits.