Although childcare instability has been the focus of a large body of research, daycare instability (i.e., instability related only to the daycare center itself) has yet to receive adequate empirical attention. In the context of the COVID-19 outbreak, this study examines longitudinal associations between daycare instability throughout the first 12 months of the pandemic (T0; retrospectively reported) and children's psychosocial adjustment approximately 2 (T1) and 2.5 (T2) years into the pandemic. This study also extends previous research by examining longitudinal associations with the quality of the parent-child relationship 3 years into the pandemic (T3), a potentially relevant outcome currently missing from research on childcare instability. Questionnaires assessing daycare instability, child stress reactions, child internalizing problems, and parent-child relationship quality were completed by Israeli parents (NT0,T1 = 1226, Meanparent_age = 34.53, SDparent_age = 5.95, 62% mothers; Meanchild_age = 3.22, SDchild_age = 1.19, 52% girls) at three different assessment points covering four distinct time periods throughout the first 3 years of the pandemic (T0-T3). A longitudinal path model revealed that daycare instability throughout the first year of the pandemic was indirectly associated with more conflict and less closeness in the parent-child relationship three years into the pandemic. These associations were mediated by child stress reactions and internalizing problems, as assessed approximately 2 and 2.5 years into the pandemic, respectively. Results suggest that daycare instability is an early childhood contextual stressor, and a comprehensive examination of the model supports a stress mediation model involving potential child-driven effects on the parent-child relationship quality.