Numerous studies indicate that children of adolescent mothers are at an increased risk for a variety of negative outcomes, even after controlling for diverse social and health factors. However, relatively less research has examined positive adjustment in these children, or protective factors associated with such adjustment. We examined the prediction of positive behavioral, social, and academic adjustment at Grade 3 in a sample of 100 children born to adolescent mothers, followed longitudinally since the children were 1 year old. Individualized testing and parent and teacher ratings were used to measure adjustment outcomes. Predictor variables were selected from characteristics of the child and parenting/family context. Logistic regression analyses indicated that aspects of children's positive adjustment in Grade 3 were predicted by a number of child and parenting/family variables measured at least 4 to 5 years earlier. Significant predictors included lower levels of child externalizing behavior, more advanced language development, lower levels of maternal depressive symptoms, and higher levels of positive parenting. Implications for preventive intervention and future research are discussed.