AbstractYouth in foster care overwhelmingly display heightened risks for both internalizing and externalizing behaviours. Few studies document how and under what conditions foster parents effectively respond to child behaviours. The overarching purpose of this study was to examine the relationships between foster parents' parental monitoring, youth behaviours and foster parent–youth relationship. This study utilized secondary data from National Survey of Child and Adolescent Well‐being (NSCAW II) to examine the experiences of 298 youth and their caregivers. Results indicated that parental monitoring was positively associated with lower rates of internalizing and externalizing behaviours. Interestingly, higher parental monitoring was also associated with a more positive relationship between the child and caregiver, as perceived by the youth. Demographic characteristics of youth or foster parents were not significantly associated with parental monitoring. The youth–foster parent relationship mediated associations between parental monitoring and both (a) self‐reported internalizing and externalizing behaviours and (b) caregiver reports of adolescents' externalizing but not internalizing behaviours. These findings suggest that the youth–foster parent relationship is a key mechanism to focus on and underscores the need for specialized foster parent training that emphasizes a relational approach to dealing with behavioural concerns. Future research should continue to explore these associations longitudinally.