Exposure to stress related to the COVID-19 pandemic contributes to psychopathology risk, yet not all children are negatively impacted. The current study examined a parasympathetic biomarker of self-regulation, respiratory sinus arrhythmia (RSA), as a moderator of the effects of exposure to COVID-related stress on child internalizing and externalizing symptoms in a primarily Black sample of children experiencing economic marginalization. Three to five years prior to the COVID-19 pandemic, when children were preschool-aged, RSA during baseline and a challenging parent-child interaction were collected. Between November 2020 and March 2021, children’s exposure to COVID-related stress and mental health symptomatology were collected. Results demonstrated that children who, before the pandemic, demonstrated blunted parasympathetic reactivity (i.e., no change in RSA relative to baseline) during the dyadic challenge exhibited elevated risk for externalizing symptoms. Further, the risk was greatest for children exposed to high and moderate levels of COVID stress. Consistent with diathesis-stress frameworks, these conditional effects suggest that blunted parasympathetic reactivity in response to stress in early childhood may escalate the development of externalizing symptoms following stress exposure at school age.