There is increasing interest among developmental psychopathologists in broad transdiagnostic factors that give rise to a wide array of clinical presentations (multifinality), but little is known about how these processes lead to particular psychopathological manifestations over the course of development. We examined whether individual differences in the error-related negativity (ΔERN), a neural indicator of error monitoring, predicts whether early persistent irritability, a prototypical transdiagnostic construct, is associated with later internalizing versus externalizing outcomes. When children were 3 years old, mothers were interviewed about children's persistent irritability and completed questionnaires about their children's psychopathology. Three years later, EEG was recorded while children performed a go/no-go task to measure the ΔERN. When children were approximately 9 years old, mothers again completed questionnaires about their children's psychopathology. The results indicated that among children who were persistently irritable at age 3, an enhanced or more negative ΔERN at age 6 predicted the development of internalizing symptoms at age 9, whereas a blunted or smaller ΔERN at age 6 predicted the development of externalizing symptoms. Our results suggest that variation in error monitoring predicts, and may even shape, the expression of persistent irritability and differentiates developmental trajectories from preschool persistent irritability to internalizing versus externalizing outcomes in middle to late childhood.