Background The COVID-19 pandemic and accompanying societal measures have impacted children and their families all over the world. Little is known about the factors associated with mental health outcomes in young children (i.e., 1 to 6 years old) during the pandemic. The current study aimed to examine associations with potential risk and protective factors, i.e., direct COVID-19 exposure factors as well as within-family characteristics. Methods Caregivers of children aged 1–6 years old were recruited in the Netherlands to participate in an ongoing longitudinal research project. In the current study, baseline data—collected during the 1st year of the pandemic—are reported. The final sample consisted of 2762 caregivers who answered questionnaires assessing negative and positive dimensions of their children’s mental health (i.e., anxiety, depressive symptoms, anger, sleep problems, positive affect, and self-regulation). Furthermore, caregivers provided information regarding: (1) Direct COVID-19 related factors, i.e., parental infection and death of a family member or close friend due to COVID-19, (2) Family related COVID-19 factors, i.e., parental perceived impact of the pandemic and COVID-19 related parent–child emotion regulation strategies (i.e., active, avoidant and information-focused strategies), (3) General caregiver’s distress, i.e., parental mental health, parental feelings of rejection towards their child. Regression analyses were used to examine associations with children’s mental health. Results Direct COVID-19 related factors were not associated with more mental health problems in the children, though parental COVID-19 infections were related with less anger in children. Family related COVID-19 factors and caregiver’s distress were related with children’s mental health. Higher parental perceived negative impact of the pandemic, lower parental perceived positive impact of the pandemic, more avoidant as well as more active and information-focused parent–child emotion regulation strategies, more ...