Child behavior problems have been identified as being responsible for the greatest reduction in quality of life for children between ages 1 and 19. In this study, we examine whether neighborhood social processes are associated with differences in child behavior problems in an economically and racially diverse sample of 405 urban-dwelling first grade children and whether parenting behavior mediates and/or moderates the effects of neighborhoods. Furthermore, we examine whether neighborhood social processes play the same role with regards to child behavior problems at differing levels of neighborhood economic impoverishment. Results of multivariate multilevel regression analyses indicate that a high negative social climate is associated with greater internalizing problems. High potential for community involvement for children in the neighborhood was associated with fewer behavior problems, but only in economically impoverished neighborhoods. Differences in parenting behavior did not appear to mediate neighborhood effects on behavior problems, and parenting characterized by a high degree of positive involvement was associated with fewer behavior problems in all types of neighborhoods.