We present a biobehavioural model that explains the neurobiological mechanisms through which measures of vagal regulation of the heart (e.g. respiratory sinus arrhythmia) are related to infant self-regulatory and social engagement skills. The model describes the sequential development of the neural structures that provide a newborn infant with the ability to regulate physiological state in response to a dynamically changing postpartum environment. Initially, the newborn uses primitive brainstem-visceral circuits via ingestive behaviours as the primary mechanism to regulate physiological state. However, as cortical regulation of the brainstem improves during the first year of life, reciprocal social behaviour displaces feeding as the primary regulator of physiological state. The model emphasizes two sequential phases in neurophysiological development as the fetus transitions to postpartum biological and social challenges: (1) the development of the myelinated vagal system during the last trimester and (2) the development of cortical regulation of the brainstem areas regulating the vagus during the first year postpartum. Copyright © 2010 John Wiley & Sons, Ltd.