Research on ethnic group differences has suggested that (a) adolescents from various groups differ on a number of dimensions that have been related to risk for substance use initiation, and (b) adolescents of different groups choose different substances. However, there is little consensus regarding the reasons for such differences. There is an especially high rate of alcohol use among Hispanic adolescents, and Hispanics are at high risk for alcohol abuse. In light of ethnic group differences in both substance use and the precursors of substance use in adolescence, this study examined differences among black, Anglo, Puerto Rican, and Dominican adolescents in the relation between cigarette and alcohol use and psychosocial functioning. Comparisons between the Puerto Rican and Dominican subjects were of special interest due to preexisting differences between these groups that may be attributed to acculturation. Results provided evidence of the importance of acculturation in modifying psychosocial vulnerability, especially for alcohol use, with the Dominican group at highest risk.