The present study examines the influence of economic and family stress processes on change in drug and alcohol use in a cohort of 478 Mexican American youth (50.8% female) followed longitudinally beginning in Grade 5 when the youth averaged 10.4 years of age. Adolescents, their mothers (median age 36 at Grade 5), and their fathers (median age 39 at Grade 5) were assessed on economic hardship (Grades 5 through 7), family stress processes (Grades 5 through 9), and adolescent substance use (Grades 7 through 9). Hypotheses were derived from a culturally informed family stress model (FSM), which proposes that economic hardship initiates a sequential cascade of problems involving parents' emotional distress, interparental conflict, disruptions in parenting and increased risk for adolescent substance use. Structural equation modeling was used to test these hypothesized linkages and the findings were consistent with predictions derived from the FSM. The results also demonstrated that parents' familism moderated the association between parent distress and interparental conflict, acting as a source of resilience in this family stress process. Findings suggest that prevention and intervention efforts focused on reducing caregiver distress and interparental conflict and enhancing parenting practices, as well as policies that reduce the level of economic hardship experienced by families, may aid in the reduction of adolescent substance use. Additionally, interventions focused on facilitating the cultural value of familism may promote more positive interactions between Mexican American parents which, in turn, may promote more effective parenting practices that help to reduce the risk for adolescent substance use.