This study investigated whether child psychopathology trajectories mediate the association between parent psychological distress/family functioning and mental health service use (MHSU) among children with a chronic physical illness (CPI). Data come from a longitudinal study of 263 children and youth aged 2–16 years diagnosed with a CPI and their parents assessed at baseline, six, 12, and 24 months. Parent psychological distress was measured by creating a composite score from the Centre for Epidemiological Studies Depression scale and Generalized Anxiety Disorder-7 scale, and family functioning was measured using the McMaster Family Assessment Device. Previous work identified three trajectories of psychopathology among children: low-stable, moderate-stable, and high-decreasing. Path analysis was used to estimate potential mediating effects. A significant indirect effect of parent psychological distress on healthcare professional contact through child psychopathology was found (\(\:\beta\:=\) 0.001(0.001), p = 0.021). The indirect effect of family functioning was not significant (\(\:\beta\:=\) − 0.001(0.001), p = 0.155). Addressing parent mental health may reduce child psychopathology and potentially decrease MHSU in children with CPI. Understanding these pathways is needed to develop family-centred interventions that support mental health in children with CPI and their parents.