We examined whether schools achieving better than expected educational outcomes for their students influence the risk of drug use and delinquency among urban, racial/ethnic minority youth. Adolescents (n = 2,621), who were primarily African American and Hispanic and enrolled in Chicago public schools (n = 61), completed surveys in 6th (aged 12) and 8th (aged 14) grades. Value-added education was derived from standardized residuals of regression equations predicting school-level academic achievement and attendance from students' sociodemographic profiles and defined as having higher academic achievement and attendance than that expected given the sociodemographic profile of the schools' student composition. Multilevel logistic regression estimated the effects of value-added education on students' drug use and delinquency. After considering initial risk behavior, value-added education was associated with lower incidence of alcohol, cigarette and marijuana use; stealing; and participating in a group-against-group fight. Significant beneficial effects of value-added education remained for cigarette and marijuana use, stealing and participating in a group-against-group fight after adjustment for individual- and school-level covariates. Alcohol use (past month and heavy episodic) showed marginally significant trends in the hypothesized direction after these adjustments. Inner-city schools may break the links between social disadvantage, drug use and delinquency. Identifying the processes related to value-added education in order to improve school environments is warranted given the high costs associated with individual-level interventions.