A critical area of developmental science explores factors that confer risk or protection as young children and their families experience stressful circumstances related to sociohistorical events. This study contributes to this important area by assessing relations between family context and child adjustment as children transitioned from preschool to home learning during COVID-19, and whether children higher in stress levels, indexed by morning basal cortisol, were more strongly affected. Parents of 74 children (Mage = 53.56 months, SDage = 3.68 months) completed reports spanning the home learning transition; children’s pre-COVID-19 transition salivary cortisol levels were assessed. Path analyses were used to test the preregistered study aims. Significant interactions were decomposed using simple slopes and Preacher’s Regions of Significance (ROS) method. Across the COVID-19 transition to home-based school, children with higher morning basal cortisol experienced the sharpest increase in anger when exposed to harsh/inconsistent parenting contexts. Importantly, these effects held when controlling for household chaos, socioeconomic resources, and supportive parenting. Parallel models with supportive parenting were also tested and are discussed. This study is one of the first to test and provide support for biological sensitivity to context theory within the context of a natural experiment like COVID-19.