Understanding heterogeneity in shy or inhibited children's risk for poor socioemotional adjustment can inform intervention targets. The present study considered temperament traits associated with approach and regulation that may alter trajectories away from internalizing behaviors and poor socioemotional competence among shy toddlers. Fifty-five 22-24-month-old children (22 boys) preselected for parent-reported shyness were observed during laboratory tasks designed to measure shyness, activity level, positive affect, and inhibitory control between January 2016 and January 2018. Basal respiratory sinus arrhythmia (RSA) was obtained for a subset of the sample from recordings of cardiac activity as toddlers watched a neutral video. Hierarchical regression analyses predicted internalizing and competence from activity level, positive affect, inhibitory control, and basal RSA, alone and in interaction with shyness, while controlling for child gender. Activity level was positively associated with internalizing behaviors, and inhibitory control and positive affect were negatively associated with internalizing behaviors. Importantly, shyness was associated with more internalizing behaviors among children low in inhibitory control or high in basal RSA, but not among children high in inhibitory control or low in basal RSA. Relations between temperament traits and socioemotional adjustment were specific to internalizing behaviors and did not generalize to competence. The present findings suggest that in toddlerhood positive affect and inhibitory control may serve as protective factors for shy children, lessening risk for internalizing problems, whereas high activity or greater basal RSA may forecast risk. (PsycInfo Database Record (c) 2023 APA, all rights reserved).