Background: Pediatric sleep problems are strongly linked to future emotional problems. However, research regarding the effect of internet-based cognitive behavior therapy for insomnia (iCBT-I) in early childhood on the outcome of emotion dysregulation is missing. Participants: 200 children (47% female) aged 7 to 63 months (M = 23.13) suffering from behavioral insomnia participated in the Mini-KiSS 6-week online treatment. Methods: A prepost- follow-up design was implemented. Sleep disorders were stated according to ICSD-3 and DSM-5 criteria and emotional dysregulation was assessed with an emotion dysregulation profile for children. Difference scores were calculated, a repeated-measures ANOVA, and stepwise multiple linear regression was performed. Results: After iCBT-I Mini-KiSS for young children, emotion dysregulation significantly declined immediately after the intervention (p = 0.000) and in the follow-up measurement after three months (p = 0.002). Age was associated with the change in emotion dysregulation at follow-up measurement (p = 0.017). Gender or the type of sleep disturbance did not have statistically significant impact on change in emotion dysregulation at any measurement (p ≥ 0.05). Clinically significant improvement of emotional dysregulation was achieved in 14.5% of the children from pre- to post-measurement, and 25.3% improved at follow-up. Conclusions: The findings show that treatment of pediatric insomnia reduce emotion dysregulation of infants and toddlers. Therefore, early sleep intervention might prevent mental disorder in young children. In future, an extended longitudinal design is needed to examine the preventing power of early-improved sleep on later psychopathological disorders. Beyond, future studies should examine underlying mechanisms in more detail.