Background/Objectives: Children’s social development is a significant aspect that supports appropriate behavior in the community, and parents, as the main caregivers, play a central role in developing children’s social skills. However, caregivers experiencing psychological distress – such as depression, anxiety, stress - may find it challenging to provide a nurturing rearing environment. This longitudinal study examined whether caregivers’ baseline mental health predicts children’s social skills 1 year later in an urban Indonesian context. Methods: A one-year follow-up study was conducted in an urban area of Indonesia in 2023–2024, inviting all nine kindergartens in the area to participate. Caregivers completed the demographic and Depression, Anxiety, Stress Scale (DASS-21), while teachers assessed children’s social skills using the Social Skills Scale (SSS). Linear mixed-effects models with random intercepts for kindergarten were estimated to account for clustering. Results: Finally, a total of 270 parent–child dyads were included. After adjusting for baseline social skills and covariates, higher levels of baseline caregiver depression (B = -0.15, p < .001), anxiety (B = -.22, p < .001), and stress (B = -.27, p < .001) were associated with lower children's social skills in the follow-up. Conclusions: Even subclinical variations in caregiver psychological distress may meaningfully influence children’s social development over time. Strengthening caregiver mental health support, particularly in urban communities, may represent an important pathway for promoting early social competence and long-term developmental outcomes.