Purpose Understanding the effects trauma has on refugee parents and consequently, their children, is the first step in interrupting the intergenerational transmission of trauma. This study aims to investigate the impacts of parental exposure to trauma pre-settlement on parent and child reports of developmental difficulties as mediated by parental post-traumatic stress symptomology and harsh parenting. Design/methodology/approach The study included 414 refugee children (age M = 14.04, SD = 2.00; 48.3% female) and their caregivers (age M = 41.78, SD = 5.24, 77% female). The sample was drawn from the Building a New Life in Australia study, a large, representative cohort study of resettled refugees in Australia. Only data collected where both parents and their children could be matched were used in this study. Findings Results indicated that trauma was significantly associated with increased parental post-traumatic stress disorder (PTSD) symptoms in all models and was negatively, albeit weakly, associated with lower levels of harsh parenting in the overall model which combined parent and child reports. Trauma also had a weak, positive indirect effect on developmental difficulties via parental PTSD in both the overall model and the model assessing parent-rated developmental difficulties. In all models, harsh parenting was associated with increased developmental difficulties, although harsh parenting did not act as a significant mediator of the effects of trauma or parental PTSD. Originality/value Results suggest that prior traumas had less of an adverse effect on parenting and child adjustment as was expected. Parenting, however, was strongly associated with poor child adjustment, indicating that this may be a key factor to encourage positive adjustment for refugee children.