Objective: To examine the factors associated with psychological distress in parents and carers of Aboriginal children living in urban communities in New South Wales. Design: Cross-sectional survey (phase one of the Study of Environment on Aboriginal Resilience and Child Health [SEARCH], November 2007 - December 2011). Setting and participants: Primary care; 589 parents and carers of Aboriginal children were recruited when attending one of the four Aboriginal Community Controlled Health Services (ACCHSs) in urban NSW that participated in SEARCH. Main outcome measure: Kessler Psychological Distress Scale (K10) scores; a score of 22 or higher was deemed to indicate high levels of psychological distress. Results: High levels of psychological distress were identified in 18% of our sample. The factors most strongly associated with this distress were functional limitations (v those with K10 scores under 22: adjusted odds ratio [aOR], 4.2; 95% CI, 1.3-13.5), previous hospitalisation (aOR, 5.5; 95% CI, 1.5-19.4) or other treatment for social and emotional wellbeing (aOR, 3.3; 95% CI, 1.3-8.4), low satisfaction with feeling part of the community (aOR, 0.83; 95% CI, 0.70-0.98) and low involvement in clubs and groups (aOR, 2.9; 95% CI, 1.2-7.3). Conclusions: Clinicians should note that those with functional limitations or a history of treatment for mental health problems are at higher risk of psychological distress and may require additional support. Increased funding that allows ACCHSs to provide mental health services, and funding and promoting programs and activities that increase social connectedness should remain focuses for ACCHSs and policy makers.