Within-family covariation between interparental hostility and adolescent behavior across three interactions over a 2-year period was explored in a sample that included 37 typical adolescents and 35 adolescents recently hospitalized for psychiatric difficulties. More interparental hostility across the three interactions was associated with more adolescent hostility and more positive engagement (at a trend level) regardless of psychiatric background. Parent-to-child hostility in each interaction mediated the link for adolescent hostility but not for positive adolescent engagement. Emotion regulation capacities and age were linked to variability in adolescents’ behavior in the presence of interparental conflict. In interactions with more interparental hostility, adolescents with greater capacity to tolerate negative affect were more likely to show increased positive engagement, and adolescents who were better able to modulate their emotional expression were less likely to show increased hostility. Covariation between interparental and adolescent hostility across the three family interactions decreased as the adolescent aged. These findings are consistent with the theory that exposure to interparental hostility is emotionally disequilibrating, and that adolescent responses may reflect differences in emotion regulation and other developmentally based capacities. Gender and variations across families in overall levels of hostile parenting were also linked with adolescent behavior in the presence of interparental hostility.