Integrating emotional, socio-cultural, and developmental perspectives, our work focuses on examining the emergence of self-regulatory abilities and emotion understanding in children. In particular, we explore how parent-child interactions serve as a mechanism underlying the development of these complex social-cognitive abilities. Furthermore, we are interested in how these abilities relate to later psycho-social adjustment. We take a bio-ecological systems theory approach, which argues that multiple environmental and individual subsystems play important roles in influencing children’s development (Bronfenbrenner, 1979). Importantly, specific mechanisms and consequences of these interactions on children’s socio-emotional understanding and mental health outcomes are understood through the lens of the cultural-fit hypothesis, which emphasizes the person-situation interaction and highlights how psychological processes may vary across cultures and contexts. This understanding would lead to different solutions to the same problems of healthy adaptation and development, as well as acknowledging different strengths.