This article examines the relationship between coparenting and family-level processes during preschool and peer relationship outcomes in middle childhood, and the hypothesis that children's ability to regulate emotion (as indexed by basal vagal tone and the ability to suppress vagal tone) may moderate this relationship. We predicted that high vagal tone and a greater ability to suppress vagal tone would buffer children from the effects of negative coparenting and family processes. Results indicated that hostile-withdrawn coparenting predicted higher levels of conflicted play and lower levels of positive peer conversation. Vagal suppression also moderated the relationship between hostile-withdrawn coparenting and peer conflict. For children who were unable to suppress vagal tone, hostile-withdrawn coparenting was associated with higher levels of peer conflict, while for children who were able to suppress vagal tone there was no relationship hostile-withdrawn coparenting and peer conflict. The relationship between hostile-withdrawn coparenting and positive peer conversation was also moderated by children's ability to suppress vagal tone. For children who were unable to suppress vagal tone, there was no relationship between hostile-withdrawn coparenting and positive peer conversation, while for those who were able to suppress vagal tone, hostile-withdrawn coparenting was associated with less positive peer conversation. Cohesive family-level processes also predicted positive conversation in play at age 9 after controlling for positive conversation at age 5; however, this relationship was not moderated by vagal suppression. Basal vagal tone also did not function as a moderator of relations between hostile-withdrawn coparenting and peer play. Results are discussed in terms of the effects of negative coparenting on children with different patterns of modulating physiological arousal.