This research examined the idea that children's inferences about their parents' goals for them is a possible mechanism by which parents' responses to their children's performance contribute to children's psychological functioning. American (N = 447; M[subscript age] = 13.24 years; 49% girls; 95% European American) and Chinese (N = 439; M[subscript age] = 13.36 years; 52% girls) early adolescents reported on parents' responses to their performance, parents' self-worth and self-improvement goals for them, and their psychological functioning (e.g., subjective well-being) twice over a year. The more parents used success-oriented responses, the more their children inferred they held self-worth goals, which predicted enhanced psychological functioning among children over time. The more parents used failure responses, the more their children inferred they held self-improvement goals, but this did not underlie the tendency for parents' failure responses to predict poorer psychological functioning over time. These pathways tended to be stronger in the United States than China.