Interpretation biases and inflexibility (i.e., difficulties revising interpretations) have been linked to increased internalizing symptoms. Although adolescence is a developmental period characterized by novel social situations and increased vulnerability to internalizing disorders, no studies have examined interpretation inflexibility in adolescents. Additionally, no studies (on adolescents or adults) have examined interpretation flexibility as a protective factor against adverse outcomes of interpersonal events. Using a novel task and a 28-day diary we examined relations among interpretation bias and inflexibility, internalizing symptoms, and negative interpersonal events in a sample of children and adolescents (N = 159, ages 9–18). At baseline, negative interpretation bias was positively correlated with social anxiety symptoms, and positive interpretation bias negatively correlated with social anxiety and depressive symptoms. Inflexible positive interpretations were correlated with higher social anxiety and depressive symptoms, while inflexible negative interpretations were correlated with higher social anxiety. Finally, interpretation inflexibility moderated daily associations between negative interpersonal events and depressive symptoms in daily life, such that higher inflexibility was associated with stronger associations between interpersonal events and subsequent depressive symptoms, potentially increasing depressive symptom instability. These results suggest that interpretation biases and inflexibility may act as both risk and protective factors for adolescent anxiety and depression.