Aim: Parental separation has been associated with poor mental health in children with better outcomes in children living in joint physical custody compared with those living with one parent after the separation. In this study, we investigated socioeconomic and relational predictors in early childhood of later parental separation and family arrangements thereafter. Methods: This study included 34 768 children from the Danish National Birth Cohort, who were living with both parents at the 6 months' data collection and followed up in 2010-2014 at age 11 years. Questionnaire data from the two data collections were linked with population registers in Statistics Denmark about parental income, education and psychiatric care and analysed in logistic regression models. Results: Socioeconomic indicators of the family and parental psychiatric disorders before birth of the child and family relationships in infancy predicted parental separation at age 11 year. For children with separated parents, a high family income and a high parental educational level were the main predictors of living in joint physical custody at the 11-year follow-up. Conclusion: Socioeconomic living conditions predict parental separation as well as living arrangements thereafter. Studies of consequences of living arrangements after parental separation should account for family factors preceding the separation.