Transactional models of analysis can examine both moment-to-moment interactions within a dyad and dyadic patterns of influence across time. This study used data from a prospective adoption study to test a transactional model of parental depressive symptoms and the dyadic interactional quality between mother and child over time, utilizing contingency analysis of second-by-second behavioral data. In order to consider both genetic and environmental influences on the dyadic interaction, depressive symptoms were examined in both adoptive and birth mothers, and the moment-to-moment quality of the adoptive mother and child interaction was assessed in toddlerhood. Adoptive mother depressive symptoms at 9 months increased the likelihood that, at 18 months, children reacted negatively to their mothers’ negative behavior, which in turn predicted higher levels of adoptive mother depressive symptoms at 27 months, suggesting that over time mother depressive symptoms influence and are influenced by the quality of the moment-to-moment interaction with her toddler. Birth mother depressive symptoms moderated the association between the dyadic interaction at 18 months and adoptive mother depressive symptoms at 27 months, suggesting a child-driven contribution to the mother-child interaction that can be measured by a genetic vulnerability.