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Based on China Household Finance Survey (CHFS) data from 2019, this paper explores the impact of the residential pattern of coresidence with parents on the labor market performance of women in married families with minor children. The study finds that coresidence with parents significantly increases the possibility of female labor market participation and positively impacts women’s employment income. To overcome the potential endogeneity problem of residential patterns, this paper uses the Heckman two-step method and the conditional mixed process estimation method (CMP method) for regression, and the conclusions remain robust. The mechanism analysis shows that coresidence with parents has both grandchild care and elderly care factors, which have a spillover effect and a crowding-out effect on female labor market performance, respectively. Since the spillover effect is more significant than the crowding-out effect, coresidence with parents positively impacts women’s labor market performance. The heterogeneity analysis shows that in terms of labor force participation rate, coresidence with parents has a more significant impact on women in families with children aged 0–6, women in families without boys, and women in families with employed husbands. In terms of income, coresidence with parents has a more significant impact on women in families with employed husbands. This study provides a new perspective for promoting female labor market performance and can serve as a reference for future policy formulation.