Numerous studies have assessed families' employment and financial stability following welfare reform. Yet little research has addressed whether welfare and work transitions are linked with other changes in family functioning. Using a representative sample of approximately 2,000 low-income urban families from the Three-City Study, analyses assessed whether mothers' welfare and employment experiences over a two-year period following welfare reform were related to changes in family well-being. Lagged regression models controlling for family characteristics and earlier levels of functioning found that moving into employment and stable employment (of 30 hours or more per week) were linked to substantial increases in income and improvements in mothers' psychological well-being. Movements into employment also were associated with declines in financial strain and food insecurity. Sustained or initiated welfare receipt was related to relative declines in income, physical health, and psychological well-being, but also to improved access to medical care. In contrast, mothers' welfare and work experiences showed very limited relations to changes in the quality of parenting or of children's home environments. These patterns were similar for families with young children and those with adolescent children. Results suggest that parenting behaviors are more resistant to change than are maternal emotional and economic functioning.