This study examined individual differences in children's emotional understanding and behavioral adjustment. Participants included 220 first- and second-grade children (75% regular education, 25% special education) who were individually interviewed using the Kusche Affective Interview--Revised. Dependent measures of emotional understanding and experience included the ability to provide personal examples of 10 different emotions and the cues used for recognition of five emotions in oneself and other persons. Children were also administered the WISC-R Vocabulary, Block Design, and Coding subtests. One parent independently completed an Achenbach Child Behavior Checklist for each child. Results indicated that children who were rated as higher in behavior problems showed deficits in emotional understanding. Intellectual functioning was negatively associated with behavior problems and attenuated the effects of behavior problems on emotional understanding. Implications of the current findings for prevention and treatment programs for children with behavior problems are discussed.