Objective: To describe the trajectory of patient and caregiver mental health from diagnosis through the first year of treatment for pediatric cancer and assess whether rates of clinically relevant symptoms were elevated compared with norms. We examined mean levels of internalizing and externalizing symptoms and posttraumatic stress symptoms (PTSS) in children with cancer, and depression, anxiety, and PTSS in caregivers during the first year of treatment; the proportion of patients and caregivers that scored in the clinical range at each time point; and the typical trajectory of symptoms in patients and caregivers and whether trajectories differed between individuals. Method: Families (N = 159) of children newly diagnosed with cancer (Mage = 5.6 years; range = 2–18 years) participated in a short-term prospective study. Primary caregivers provided monthly reports of their own and their children’s psychological adjustment. Results: On average, children were well-adjusted. However, compared with norms, there was a higher than expected proportion of children with clinically relevant internalizing symptoms around the time of diagnosis. On average children’s symptoms declined over time, though variability was observed. Caregivers were less well-adjusted on average, with a high proportion reporting clinically relevant symptoms over time for depression and anxiety. Caregiver symptoms also declined over time, though considerable variability was observed. Conclusion: Although most children remain well-adjusted during the first year of treatment, many caregivers experience clinically relevant symptoms of psychological distress. Implications for development of interventions targeting at-risk patients and caregivers are discussed. Identifying processes that predict between-family variability in trajectories of psychopathology is an important next step.