Research on the etiology of internalizing disorders has focused on biological and environmental factors, however, the role of developmental competencies has not been explored much. The aim of the current report is to understand the developmental competencies, temperament, parenting practices and psychosocial adversities in internalizing disorders. The relationship of each of these domains with functional impairment was also explored. The developmental competencies considered in this study include interpersonal competence, emotion regulation, executive functioning, adaptive behaviour and self-concept. The sample consisted of 30 children and adolescents with internalizing disorders belonging to the age group of six to 18, and one of their parents. Descriptive statistics and correlational analyses were used to analyse the data. The findings revealed that positive parenting shares an inverse relationship with functional impairment; other variables were not found to be related to impairment. On comparison with non-clinical samples in previous studies, interpersonal competence and self-concept were found to be at lower levels in the current sample. A model of a bidirectional relationship between individual and environmental factors together contributing to internalizing disorders has been proposed. The study will be continued on a larger scale on a clinical group and control group to test the significance of this model.