A transactional model examining the longitudinal association between vagal regulation (as indexed by vagal withdrawal) and maternal sensitivity from age 2.5 to age 5.5 was assessed. The sample included 356 children (171 male, 185 female) and their mothers who participated in a laboratory visit at age 2.5, 4.5, and 5.5. Cardiac vagal tone was obtained during a baseline task and during emotional frustration tasks. Maternal sensitivity was assessed via direct observation during a pretend play and cleanup task. To test for transactional associations, a path model estimating stability paths for vagal withdrawal and maternal sensitivity was compared with a full reciprocal model that included all cross-lagged pathways. A chi-square difference test was used to evaluate whether the cross-lagged model explained the data above and beyond the stability model. The vagal withdrawal cross-lagged model was found to fit significantly better than the stability model and revealed that maternal sensitivity at 2.5 years was associated positively with vagal withdrawal at 4.5 years, and vagal withdrawal at 4.5 years was associated positively with maternal sensitivity at 5.5 years. These results suggest that early sensitive responding by mothers was associated with increases in vagal withdrawal, which in turn was associated with higher levels of sensitive parenting.