The parenting landscape has changed dramatically over the last decade with the increasing prevalence of screen time. There is a growing body of evidence that handheld devices may disrupt fundamental parent-child interactions, however little is known regarding the effect of these devices for parents with mental health difficulties on child outcomes. The Australian Department of Health (2019) has recommended that children between two and five years old should be limited to less than an hour of screen time per day. A cross-sectional study of 214 parents with children aged 4.5–6 years old was conducted to examine the relationship between parental mental health, handheld screen time and child outcomes. Results from bivariate correlations indicated parental anxiety, depression and stress was significantly associated with parental phone use, such that greater symptoms was associated with increased screen time. Parental anxiety was also associated with parental tablet use, and child phone and tablet use. Further analyses showed that no mediation effects were observed among key variables. Most children were adhering to screen time guidelines, which implied that children showed reduced internalising and externalising problems. These findings have implications for policymakers and allied health professionals to consider the effects of parental mental health within the screen time framework for children’s wellbeing.