Parental depression is a significant risk factor for adolescents’ engagement in risk taking. Yet the neural processes that mediate the link between parental depression and adolescents’ functioning remain unknown. Using a longitudinal functional magnetic resonance imaging design, we investigated how parental depression is associated with changes in adolescents’ neural reactivity to rewards during a risk-taking task, and how such changes in neural reactivity are associated with changes in risk-taking behavior. Greater parental depressive symptoms were associated with increases in their adolescent child’s risk taking and self-reported externalizing behavior over time. At the neural level, adolescents of parents with greater depressive symptoms showed longitudinal increases in the ventral striatum and dorsolateral prefrontal cortex to rewards during risk taking. Longitudinal increases in adolescents’ ventral striatum activation mediates the link between greater parental depression and increases in adolescents’ risk taking and externalizing behavior. These findings provide novel evidence that parental depression may contribute to changes in adolescents’ neural reactivity to rewards over time, which is associated with greater increases in their risk taking and externalizing behavior.