A large body of research addresses whether and how parental partnership quality affects child wellbeing. While much of this research has focused on nuclear families, less is known about patterns in stepfamilies. This study adopts a dyadic perspective to explore how parental partnership quality relates to the wellbeing of children living with both biological parents versus those with a biological parent and a stepparent. We apply multivariable linear regression and a mediation analysis on longitudinal data from the German Panel Analysis of Intimate Relationships and Family Dynamics (pairfam) to understand the relationship between family structure, step- and biological parent’s partnership quality and children’s self-reported wellbeing, operationalised over the Strength and Difficulties questionnaire (SDQ-scores). The analytical sample includes children who live in heterosexual couple households (n=1,781). We differentiate two separate dimensions of parental partnership quality, namely the frequency of conflict and esteem between the (step-)parents. Results show that children living with a stepparent exhibit higher total difficulties score compared to children living with both their biological parents. However, parental conflict occurs less and esteem more frequently in stepfamilies than in nuclear families. Mediation analysis indicates that partnership quality partially mediates the impact of family structure on SDQ scores. Our analysis suggests that the negative effect of living with stepparents on children’s socio-emotional wellbeing is slightly mitigated by increased parental esteem and lower conflict in these unions.