This study characterised resting and task-related activation in preschool children, and reported similar effects to those found in older children and adults for resting activation, with novel effects for task-related activation. As task-related activation indices were predictive of externalising behaviours in both preschool and kindergarten, these results have implications for early identification of children who experience externalising behavioural problems across the transition to school period. WHAT DOES THIS STUDY ADD?: This study provides new data on how the fundamental physiological processes of resting and task-related activation, both of which are theorised to contribute to "upstream" processes such as executive functions and broader behaviour, are represented in the frontal EEG of preschool aged children. We also learn that the top-down task-related activation indices for delta and theta activity were predictive of current mental health status and future status after the transition to kindergarten, while the bottom-up resting activation indices were not.