The present study sought to unravel the psychological processes through which mass incarceration, specifically paternal incarceration, is negatively affecting the next generation of children. Data came from 4,327 families from 20 cities who participated in a 10-year longitudinal study. Parents and children reported on children’s rule-breaking behaviors and depressive symptoms when they were on average ages 5 (2003–2006), 9 (2007–2010), and 15 (2014–2017). Parental surveys and disposition information were combined to assess paternal incarceration at each age. Results showed that children who experienced paternal incarceration at age 5 also demonstrated more rule-breaking behaviors at age 15. Children’s age-9 depressive symptoms partially mediated our finding, such that children who experienced paternal incarceration at age 5 also showed greater depressive symptoms at age 9, which in turn predicted greater rule-breaking behaviors at age 15. Paternal incarceration predicted future rule-breaking behaviors more strongly than did other forms of father loss. Because we found paternal incarceration during childhood is associated with worsened adjustment into adolescence, we discussed the need for developmentally appropriate practices in the criminal justice system.