Preschool process quality and activity setting are considered important aspects influencing child engagement. As such, it is important to understand how educational settings can promote engagement, particularly for children with disabilities and/or at risk. This observational study describes process quality and activity setting in inclusive preschools, analyzing its predictive role for child engagement. Participants were 184 children attending 39 preschools. Three groups of children, nested within classrooms, were considered: with disabilities (n = 45), at risk (n = 59), typically developing (n = 80). Child Observation in Preschool assessed engagement and activity setting; Classroom Assessment Scoring System assessed quality of teacher--child interactions. Research Findings: Results from multilevel regressions show that classroom emotional support and organization and more time in free play were positively predicting child engagement, whereas more time in whole group was a negative predictor of engagement. Besides these main effects, an interaction effect between child developmental functioning and activity settings was found. For at-risk children, more time in whole-group activities had greater negative effects on child engagement. For children with disabilities, more time in free-play had greater positive effects on child engagement. Practice or Policy: Results contribute to inform teachers regarding the importance of individualizing interactions and planning activity settings to promote engagement and participation in inclusive preschools.