Learning to control behavior when receiving feedback underlies social adaptation in childhood and adolescence, and is potentially strengthened by environmental support factors, such as parents. This study examined the neural development of responding to social feedback from childhood to adolescence, and effects of parental sensitivity on this development. We studied these questions in a 3-wave longitudinal fMRI sample (ages 7–13 years, n = 512). We measured responses to feedback using the fMRI Social Network Aggression Task through noise blasts following peer feedback and associated neural activity, and parental sensitivity using observations of parent-child interactions during Etch-a-Sketch. Results revealed largest reductions in noise blasts following positive feedback between middle and late childhood and following negative feedback between late childhood and early adolescence. Additionally, brain-behavior associations between dorsolateral prefrontal cortex activation and noise blast durations became more differentiated across development. Parental sensitivity was only associated with noise blast duration following positive feedback in childhood, but not in adolescence. There was no relation between parental sensitivity and neural activity. Our findings contribute to our understanding of neural development and individual differences in responding to social feedback, and the role of parenting in supporting children’s adaption to social feedback.