Youth exposed to family aggression may become more aggressive themselves, but the mechanisms of intergenerational transmission are understudied. In a longitudinal study, we found that adolescents’ reduced neural activation when rating their parents’ emotions, assessed via magnetic resonance imaging, mediated the association between parents’ past aggression and adolescents’ subsequent aggressive behavior toward parents. A subsample of 21 youth, drawn from the larger study, underwent magnetic resonance imaging scanning proximate to the second of two assessments of the family environment. At Time 1 (when youth were on average 15.51 years old) we measured parents’ aggressive marital and parent–child conflict behaviors, and at Time 2 (≈2 years later), we measured youth aggression directed toward parents. Youth from more aggressive families showed relatively less activation to parent stimuli in brain areas associated with salience and socioemotional processing, including the insula and limbic structures. Activation patterns in these same areas were also associated with youths’ subsequent parent-directed aggression. The association between parents’ aggression and youths’ subsequent parent-directed aggression was statistically mediated by signal change coefficients in the insula, right amygdala, thalamus, and putamen. These signal change coefficients were also positively associated with scores on a mentalizing measure. Hypoarousal of the emotional brain to family stimuli may support the intergenerational transmission of family aggression.