Emotional regulation in early infancy develops mainly through social interactions with caregivers and is a key process in socioemotional functioning. The use of physiological measures such as vagal tone and cortisol can help researchers understand what underlies this association between parent-infant interaction, emotion regulation, and socioemotional functioning. This review integrates 39 studies from four databases. We first examine associations between parent-infant interactions and physiological measures of emotion regulation in children aged 0-24 months. We then examine the association between these physiological measures and children's socioemotional outcomes. The results provide insights into which aspects of parent-infant interactions are associated with the physiological functioning of infants and which socioemotional outcomes in infants may be influenced by this functioning.