An investigation was conducted to assess parental and family characteristics of boys who displayed competence when exposed to a set of stressful circumstances expected to impair and/or retard their development. Participating children and families were involved in the University of Rochester Child and Family Study, a prospective developmental project in which one parent had been hospitalized for psychiatric disorder. Competence in 7- and 10-year-old boys was defined by scores on a combined teacher and peer index and a parent rating of child behavior. In this paper, the first of two describing this study, details of the sample, the pathology of the hospitalized parent (in this instance, the mother), and the construction of the child's competence scores are described. Five hypotheses regarding the relationship between parental or family characteristics and competence are articulated. Specifically, it was hypothesized that (1) children with adequate competence scores would come from families in which the hospitalized adult had an affective disorder and low levels of chronicity; (2) a balance of family warmth and activity level would be related to child competence; (3) a parental first admission late in the child's life would be associated with higher child competency scores; and (4) in its effect on competence, present age of child would interact with chronicity of disorder and age of child at parent's first admission. (Author/RH)