Early development of emotion regulation plays a vital role in children's school readiness and later academic success. Most studies on toddlers' emotion regulation are laboratory-based and correlational research. Little attention has been paid to their development of emotion regulation in daily parent-toddler interactions in naturalistic contexts. Inspired by Vygotsky's cultural-historical theory, this study sought to examine how everyday parent-toddler interactions support toddlers' development of emotion regulation. Participants were a Chinese family with a two-year-old toddler girl. The data collected by digital video observations and the mother's diary over a year suggested that mother's changing from the self-focused to the child-focused perezhivanie contributed to the co-development of emotion regulation in both the mother and the toddler. It is argued that adults' child-focused perezhivanie in everyday dramatic collisions plays an essential role in the co-development of emotion regulation in both adults and toddlers. Practical recommendations are provided in the conclusion.