Dr. Laura Nelson Baenrstein, a psychiatrist who graduated from medical school at age 41 while she was rearing two teen-agers, died Friday of cancer at her home in Bethesda. She was 78.

Born in Madison, Wis., Dr. Baernstein graduated from the University of Wisconsin there in 1922 with a bachelor's degree in biology. She was married in 1923, had her first child a year later, an lived in Madison with her husband, then a graduate student and later a professor of biochemistry.

In the mid-1920s, she founded one of the country's first co-op nursery schools, and over the next decade regularly took courses in psychology and education at the university.

As her children grew up, she entered he university's medical school. She graduated in 1939, after taking a reduced load of courses for more than six years.

After her internship in Baltimore, Dr. Baernstein and her family moved to Bethesda. In 1942 she became a physician at clinics operated by the D.C. government. From 1949 to 1952, she completed a residency in psychiatry at St. Elizabeth Hospital, and then returned to the D.C. government clinics as a psychiatrist, specializing in the metnal health of children and their parents. She retired in 1962.

From 1949 until several years ago, she had a part-time private practice in psychiatry at her home.

Dr. baernstein was a member of the American Medical Association, the American Psychiatric Association, and the American Women's Medical Association. She belonged to the Cedar Lane Unitarian Church.

Surviving are her husband, Harry, of the home; a son, Daniel, of Ontario, Calif.; a daugher, Selma Landing, of Burbank, Calif., 10 grandchildren, and two great-grandchildren.