Background: Research suggests there is considerable opportunity to improve children’s movement behaviors while they are being cared for by their grandparents. An understanding of the extent to which grandparent practices facilitate children’s engagement in physical activity is critical to the development of health interventions targeting grandparent caregivers. This study examined the activity-related beliefs and practices of grandparents and their association with grandchildren’s engagement in various movement behaviors while in grandparental care. Methods: Australian grandparents (N = 1190; 60% women) who provided regular care to a grandchild aged 3–14 years were recruited via a web panel provider to complete an online survey. The survey assessed grandparents’ physical activity-related beliefs (eg, perceived importance) and practices (eg, support and social control) and their grandchildren’s engagement in physical activity (unstructured, structured, and outdoor play) and screen-based activities while in grandparental care. Results: The importance of grandchildren’s physical activity was rated highly by grandparents. Grandparents’ support for their grandchildren’s physical activity was positively associated with their grandchildren’s engagement in structured physical activity, unstructured physical activity, and outdoor play. Negative social control was associated with greater engagement in screen-based activities. Other correlates of grandchildren’s physical activity and screen-based activities included grandparents’ own engagement in these activities. Conclusions: Findings highlight the importance of reinforcing the beliefs and practices that positively influence children’s movement behaviors and addressing those that have unintended consequences. Encouraging grandparents to support their grandchildren’s physical activity and discouraging forms of negative social control are likely to be important in efforts to promote physical activity in children.