Children of depressed mothers often have atypical cortisol levels. Child characteristics associated with emotion regulation difficulties moderate associations between maternal depression and child hypothalamic-pituitary-adrenal (HPA) activity. We hypothesize that infants of more depressed mothers who utilize more independent emotion regulation will have higher cortisol levels. Mother-infant dyads (N = 193) were recruited from the community. Maternal depression was assessed using the Beck Depression Inventory II, infant regulation strategies were coded during a Toy Frustration Task, and cortisol was collected at baseline, 20, and 40 minutes after two challenges (Toy Frustration and Strange Situation). Results indicate that infant emotion regulation moderates associations between maternal depressive symptoms and infant total cortisol output (AUCG) and cortisol reactivity (AUCI), during the Toy Frustration task. Infants who used more independent regulation had elevated cortisol secretion. Associations were not replicated during the Strange Situation procedure. Findings are discussed in terms of adaptive emotional and physiological regulation.