Fifty-six mothers and their 24-month-old toddlers were observed on two occasions in a series of laboratory procedures designed to assess relations between emotional functioning (emotional reactivity and emotion regulation) in an individual assessment and social behavior with a same-sex peer. Emotional reactivity was assessed using two frustration tasks designed to elicit distress. Emotional regulation was assessed by examining the child's behaviors (venting, distraction, focal-object focus, self-orientation, and mother-orientation) when confronted by the two distress-eliciting tasks, Peer play behaviors were coded for social participation and peer-directed conflict (aggressive) behavior. Thc results indicated that both emotional reactivity and emotion regulation were important predictors of at least two types of social behavior. conflict and cooperation. Distress to frustration, when accompanied by high venting or high focal-object focus, was significantly related to conflict with peers but not wizen accompanied by distraction, mother-orientation or self-focused behaviors. These findings are discussed in terms of the adaptive value of emotion regulation skills in early development, and the importance of identifying the causal relations between child regulation and early social competence.