The present study compares parental stress in mentally ill parents and non-clinical parents. It also investigates the association between parental stress and children’s psychiatric symptoms, focusing on group differences in the strength of this association between mentally ill parents and non-clinical parents. 83 families with a mentally ill parent as well as a non-clinical sample of 121 families were included in the study. Parental stress was assessed by self-reports with the German version of the Parental Stress Scale and psychiatric symptoms of children were assessed by the Strength and Difficulties Questionnaire based on parent ratings. Results showed that parental stress was higher in mentally ill parents than in non-clinical parents. Children’s symptoms correlated significantly with parental stress. This association was significantly stronger in the group of mentally ill parents than in the non-clinical sample. The results indicate a vicious circle within these families and support the need for family-based interventions for these families.