Black and Latinx caregivers face high risk for parenting stress and racism-related stress due to experiences of racial discrimination (RD). This study aimed to explore the associations between RD, parenting stress, and psychological distress in caregiver-child dyads, as well as the impact of a mentalizing-focused group intervention on caregivers' experiences of RD distress. Ethnoracially minoritized caregivers of children aged 5-17 years old participated in a non-randomized clinical trial ( = 70). They received either a 12-session mentalizing-focused group parenting intervention or treatment-as-usual in outpatient psychiatry. We assessed self-reported frequency and distress related to RD, parenting stress, and psychological distress at baseline (T1) and post-intervention (T2). Caregiver- and self-reported child psychological distress were also measured. The results showed that greater RD frequency and greater RD distress separately predicted higher overall parenting stress and parental role-related distress. Greater RD distress was linked to increased psychological distress in caregivers. Similarly, greater RD frequency and distress among caregivers were associated with higher caregiver-reported, but not self-reported, child psychological distress. No significant changes in RD distress were observed between T1 and T2 for either of the treatment groups. These findings highlight the exacerbating role of RD on parenting stress and psychological distress among ethnoracially minoritized caregivers and their children.