Background: High quality child care is a population health investment that relies on the capacity of providers. The mental health and wellbeing of child care educators is fundamental to care quality and turnover, yet sector views on the relationship between working conditions and mental health and wellbeing are scarce. This paper examines child care educators' and sector key informants' perspectives on how working in family day care influences educator's mental health and wellbeing. Methods: Semi-structured telephone interviews were conducted with Australian family day care educators (n = 16) and key informants (n = 18) comprised of representatives from family day care schemes, government and other relevant organisations regarding the relationship between working conditions and educator mental health. Thematic analysis referenced the assumptions and concepts of critical inquiry and used social exchange theory. Results: Educators and key informants reported that educators' mental health was affected by the quality of their relationships with government, family day care schemes, and the parents and children using their services. These social relationships created and contributed to working conditions that were believed to promote or diminish educators' mental health. High quality relationships featured fair exchanges of educator work for key resources of social support and respect; adequate income; professional services; and information. Crucially, how exchanges influenced educator wellbeing was largely contingent on government policies that reflect the values and inequities present in society. Conclusions: Making policies and relationships between educators, government and family day care schemes fairer would contribute strongly to the protection and promotion of educator mental health and wellbeing, and in turn contribute to workforce stability and care quality. (author abstract)