Institutional caregiving is associated with significant deviations from species-expected caregiving, altering the normative sequence of attachment formation and placing children at risk for long-term emotional difficulties. However, little is known about factors that can promote resilience following early institutional caregiving. In the current study, we investigated how adaptations in affective processing (i.e., positive valence bias) and family-level protective factors (i.e., secure parent–child relationships) moderate risk for internalizing symptoms in previously institutionalized (PI) youth. Children and adolescents with and without a history of institutional care performed a laboratory-based affective processing task and self-reported measures of parent–child relationship security. PI youth were more likely than comparison youth to show positive valence biases when interpreting ambiguous facial expressions. Both positive valence bias and parent–child relationship security moderated the association between institutional care and parent-reported internalizing symptoms, such that greater positive valence bias and more secure parent–child relationships predicted fewer symptoms in PI youth. However, when both factors were tested concurrently, parent–child relationship security more strongly moderated the link between PI status and internalizing symptoms. These findings suggest that both individual-level adaptations in affective processing and family-level factors of secure parent–child relationships may ameliorate risk for internalizing psychopathology following early institutional caregiving.