This pilot study aimed to understand the moderating role of context processing (i.e. encoding and memorizing) when mothers are confronted with threatening stimuli and undergo physiologic monitoring in order to understand a possible mechanism favoring intergenerational transmission of posttraumatic stress. Thirty-one mothers (M age = 33.87 years, SD = 4.14) and their toddlers (M age = 22.66 months, SD = 7.01) participated in the study. Mothers reported adverse life events (ALE), their current posttraumatic stress symptoms (PTSS), as well as regulatory problems of their toddler. Mothers performed a context-encoding and -memory (CEM) task including emotional facial expressions (especially angry faces considered as threatening stimuli) embedded into photo-backgrounds, after which they were asked to recognize both the faces and contexts. Maternal heart rate variability (HRV) was measured during resting state. Maternal current PTSS, but not ALE, had impact on child dysregulation only for mothers with poor context processing (β = 0.014, p = .017). Baseline HRV was negatively correlated with the recognition of contexts previously associated with angry faces (ρ = -.53, p = .006), and marginally with the recognition of angry faces (ρ = -.37, p = .059). This pilot study identifies psychophysiological markers (i.e. CEM, HRV) that may influence the intergenerational transmission of posttraumatic stress. This may open new avenues in early identification and intervention with traumatized mothers and their toddlers.