Recent biosocial theories postulate that both biological risk and the social context influence the development of mental health problems [Boyce and Ellis (2005) Development and Psychopathology, 17(2), 271-301]. Guided by this framework, we examined whether basal cortisol and its diurnal rhythm were associated with mental health symptoms in early adolescence. Because cross-sectional and longitudinal investigations sometimes reveal different cortisol-mental health associations, we examined the association both concurrently and longitudinally when children transition to middle school, a time which entails a major change in social context from single to multiple teachers, classrooms, and sets of classmates. Salivary cortisol was measured three times a day (waking, afternoon, and bedtime) across 3 days when adolescents were 5th graders. Mental health was measured when adolescents were in 5th and 7th grades, just before and after the transition to middle school. To deal with the substantial comorbidity of internalizing and externalizing symptoms at this developmental stage, mental health measures distinguished overall symptom severity from the preponderance of internalizing versus externalizing symptoms (i.e., directionality). A three-level Hierarchical Linear Model was used to extract basal cortisol and its diurnal rhythm separate from the day-to-day and within-the-day fluctuations in cortisol in response to daily experiences. Results were specific to symptom severity, suggesting that cortisol is a nonspecific risk factor for mental health symptoms in young adolescents. At 5th grade, low basal cortisol was associated with concurrent symptom severity. However, longitudinally, it was adolescents with high cortisol at 5th grade who were at risk for increasing mental health symptoms by 7th grade. Flat diurnal rhythms in 5th grade were related to levels of symptom severity at both 5th and 7th grades. Considering the change in social context, as defined by the transition to middle school, helped resolve seemingly inconsistent evidence that both hypo- and hyper-arousal were associated with mental health symptoms in early adolescence.