Early life adversity experienced during childhood and adolescence negatively impacts development with increased risk of poor health outcomes and early mortality, making child maltreatment a significant public health concern. Adversity exposure broadly impacts developmental trajectories and alters physiological processes supporting emotional processing and regulation (e.g., changes or dysregulation of hypothalamic-pituitary-adrenal (HPA) axis or autonomic nervous system function). Changes to neural physiology resulting from adversity exposure dynamically influence the way children engage with the environment and the way the environment continues to influence physiology and behavior throughout development. Largely, trauma-centered research has focused primarily on children and child outcomes without factoring in caregivers as a developmental context. Caregivers are important for the development of emotion regulation and emotion processing skills with decreased emotional literacy negatively impacting the relationship between early life stress and typical behavior. An eye-tracking study employing an emotion identification task was conducted on caregiver-child dyads to assess two potential biomarkers. Attention biases exhibited by children with prenatal substance exposure in response to emotionally valenced social stimuli were evaluated as a potential biomarker for emotional processing dysregulation. Results suggest physiologically characterized emotional literacy in the caregiver mediates the relationship between negative emotion processing and significant behavior problems in the child. Problematic behaviors are likely rooted in physiological shifts and changes to autonomic nervous system function may play a role in the relationship between adversity exposure and child behavior. Child pupillometry served as a biomarker of changes to locus coeruleus and norepinephrine reactivity in response to negatively valenced emotional stimuli. Results demonstrated caregiver emotional literacy partially mediated the relationship between child pupillometry and externalizing behaviors. Broadly, results demonstrate the important role of caregivers as mediators of child emotional processing and emotion regulation for children with significant life adversity.