This study used four waves of data from a longitudinal study of 749 Mexican origin youths to test a developmental cascades model linking contextual adversity in the family and peer domains in late childhood to a sequence of unfolding processes hypothesized to predict problem substance use and risky sexual activity (greater number of sex partners) in late adolescence. Externalizing and internalizing problems were tested as divergent pathways, with youth-reported and mother-reported symptoms examined in separate models. Youth gender, nativity, and cultural orientation were tested as moderators. Family risk, peer social rejection, and their interaction were prospectively related to externalizing symptoms and deviant peer involvement, although family risk showed stronger effects on parent-reported externalizing and peer social rejection showed stronger effects on youth-reported externalizing. Externalizing symptoms and deviant peers were related, in turn, to risk taking in late adolescence, including problem alcohol-substance use and number of sexual partners. Peer social rejection predicted youth-reported internalizing symptoms, and internalizing was related, in turn, to problem alcohol and substance use in late adolescence. Tests of moderation showed some of these developmental cascades were stronger for adolescents who were female, less oriented to mainstream cultural values, and more oriented to Mexican American cultural values.