This study explores the relationship between adult children's unemployment and parental mental health. Given India's large inequalities in social capital and income, we examine the heterogeneous effects of these factors on the relationship. We utilise data from the Longitudinal Ageing Survey of India, which includes 73,396 individuals aged 45 and above. We analyse the relationship between the exposure to the unemployment of adult children and the parental risk of depression using the CES-D score, with respondents reporting four or more symptoms out of 10 considered at risk of being “depressed”. We employ inverse probability weighting based on a logistic regression model to form a pseudo-control group, accounting for confounding demographic and socioeconomic characteristics. Our findings show a 3.14 percentage points (ppts) increase in absolute terms (and a 12.48% relative increase) in the probability of parental depression risk associated with adult children's unemployment. There are no significant differences between fathers and mothers in the increased risk of depression, but for the unemployment of the firstborn son, there is a significantly higher association of increased risk of depression than for the unemployment of the firstborn daughter. Heterogeneity analyses reveal that among older adults with high social participation, there is no significant increase in their risk of depression associated with their children's unemployment. Similarly, among older adults residing in low and medium-income inequality states, the negative consequences of their children's unemployment are weaker. Overall, we conclude that while adult children's unemployment is associated with an increased risk of parental depression, higher social participation and residing in low or medium-income inequality states might have protective effects on older adults' mental health following their children's unemployment. Governments may consider expanding labour market policies that support youth labour market entry as a means to improve not only the employability of younger individuals, but also the well-being of older generations.