Infants attend daycare at an early age, which raises questions about children's sensitivity to the childcare environment and the role of different temperamental traits in their development in the early years. In a two-year longitudinal study with parent- and caregiver-reported data for Dutch children at the age of 1 and 2 years (120 children from 92 groups), we explored fine-grained dimensions of negative affect and their relationship with socio-emotional functioning. Especially shyness, frustration and soothability proved robust predictors of socio-emotional development across parent- and caregiver-reported data with both concurrent (Year-1) and predictive associations (Year-2). Also, the quality of caregiver–child interactions moderated caregiver-reported child wellbeing and competence. Infants that are open to social contacts, are easy to comfort and have low levels of frustration, and have higher levels of wellbeing and less problem behaviour in early daycare than peers with higher levels of shyness and frustration and relatively low levels of soothability.