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Findings from the Watamura, Donzella, Alwin, and Gunnar (this issue) study support the growing recognition of the importance of context on physiology and affective and behavioral regulation early in human development. This discussion focuses on the role of context and development on hypothalamic-pituitary-adrenal (HPA) axis regulation in young children. Discussed in this article are the Watamura et al. findings with regard to relevant animal studies, extension of these observations to samples of children at elevated risk for psychopathology, and experimental prevention studies with young children. It is contended that environmental factors operating at key points in development may shape affective and behavioral regulation as well as HPA axis function in children, much as environmental factors have been shown to shape HPA axis regulation in animals.