Social competence is important for obtaining and maintaining social and academic success, and for mental health and personal adjustment in childhood, adolescence, and early adulthood. Problematic peer relationships have been shown to predict such extreme outcomes as school drop out, criminality, and psychopathology (Parker & Asher, 1987). Several aspects of emotion, such as encoding and decoding, emotion regulation, and emotional expressiveness (Cassidy, Parke, Butkovsky, & Braungart, 1992; Hubbard & Coie, 1994; Parke, Cassidy, Burks, Carson, & Boyum, 1992) have been suggested as antecedents of peer competence. There has been increasing interest in exploring the antecedents of children's social behaviors, particularly in examining, family influences on the development of these behaviors (Parke & Ladd, 1992). The focus of this report is on the role of family emotion in the emergence of children's social competence. The family provides the first context for the recognition and communication of affective messages. Family members send affective messages to the child, with increasing expectation that the child will be able to interpret and respond to them. As the child moves outside of the immediate family environment, she will likely encounter others who do not share contextual cues with the child's family, do not share all of the same display rules, and who may be less willing to make the extra effort to understand the child. In addition, these people may communicate their own needs to the child in ways that may be less clear than those the child has experienced at home. Thus, it is to the child's advantage to be well versed in emotion skills as she moves beyond the confines of the family. Several studies have demonstrated a connection between parent-child interactions in structured game or physical play situations and children's social status with peers (e.g., Barth & Parke, 1993; MacDonald & Parke, 1984; Putallaz, 1987). It may be that through engaging in affectarousing encounters such as physical play, the child learns the communicative value of affect and how to use such displays to understand and regulate others (Parke et al., 1992). Physical play allows for many opportunities to learn to encourage or discourage interaction through affective expression. Past research has focused on the type of affective display used by parents during their interactions with their children. Several studies have found that children who are exposed to higher levels of parental negative affect are less well accepted by their peers, while high levels of parental positive affect are associated with greater peer acceptance (Carson, 1991; MacDonald Parke, 1984). It is assumed that children who learn to use high levels of negative affect in interaction with peers are less well accepted. Those who use more positive affect are more accepted by their age mates (Hubbard & Coie, 1994). Several limitations characterize these earlier studies. First, the studies have been conducted primarily in laboratory situations and have relied on structured games or physical play situations. One goal of the present study is to explore the generalizability of prior findings by observing family affective exchanges during an ecologically valid situation, namely a family dinner. Second, affect has been measured primarily through the use of global rating scales, rather than specific affect categories. Prior research has revealed the value of focusing on specific affective dimensions for understanding both marital and parent-child interaction patterns (Gottman, 1994; Gottman & Katz, 1989). This work and related studies (Roberts & Strayer, 1987) have suggested that not all forms of negative affect have similar effects. While harsh, angry affect is clearly associated with negative outcomes, moderate levels of negative affect may have more positive social outcomes. In this study, we assume that exposure to moderate levels of negative affect may allow children opportunities to learn to regulate negative affect, which is an important social skill (Gottman & Katz, 1989; Sroufe, 1979). …