The COVID-19 pandemic has presented youth and families with a broad spectrum of unique stressors. Given that adolescents are at increased risk for mental health and emotional difficulties, it is critical to explore family processes that confer resilience for youth in the face of stress. The current study investigated caregiver emotion regulation (ER) as a familial factor contributing to youth ER and risk for psychopathology following stressful life events. In a longitudinal sample of 224 youth (Mage = 12.65 years) and their caregivers, we examined whether caregiver and youth engagement in ER strategies early in the pandemic mediated the associations of pandemic-related stress with youth internalizing and externalizing symptoms six months later. Leveraging serial mediation analysis, we demonstrated that caregiver and youth rumination, but not expressive suppression or cognitive reappraisal, mediated the prospective associations of pandemic-related stress with youth internalizing and externalizing symptoms. Greater exposure to pandemic-related stressors was associated with greater caregiver rumination, which, in turn, related to greater rumination in youth, and higher levels of youth internalizing and externalizing symptoms thereafter. Family interventions that target caregiver ER, specifically rumination, may buffer against the consequences of stress on youth engagement in maladaptive ER strategies and risk for psychopathology.