This study examined whether parental anxiety and self-efficacy mediate the relationship between child anxiety symptoms and functional impairment in young children. Parents/carers (N = 853) of children aged 4–7 years who screened positive for elevated anxiety completed measures of child anxiety symptoms, functional impairment, parental anxiety, and parental self-efficacy. Multiple mediation analysis revealed significant indirect effects of child anxiety symptoms on functional impairment through both parental anxiety (β = 0.0127, 95% CI [0.0041, 0.0235]) and parental self-efficacy (β = 0.0062, 95% CI [0.0002, 0.0138]). Although effect sizes were modest, these findings identify parental factors as potential intervention targets. However, the cross-sectional design precludes causal inference; longitudinal and experimental studies are required before translating these findings into treatment recommendations. Prospective and intervention studies are needed to establish causality and evaluate whether targeting these parental factors reduces child functional impairment.