We examined the role of family stress as a mediator of the relationship between poverty and depressed mood among 1,704 low-income, inner-city African-American adolescents. Nearly half of participants (47%) reported clinically significant levels of depressive symptoms. Being female, reporting higher levels of family stress, and scoring higher on a poverty index were significantly associated with increased reports of depressed mood. Family stress significantly mediated the relationship between poverty and adolescent depressed mood, explaining 50% of the total effect. Sex-specific analyses revealed that this relationship only held for females, and there was no direct relationship between poverty and depressed mood for males. Results lend further support to family stress theory, although they suggest that the model may be more relevant for females than males. Implications for community-based preventive intervention and social policy are discussed.