Background: Although parental divorce is associated with increased substance use and internalizing problems, experiencing the separation of one's parents may not cause these outcomes. The relations may be due to genetic or environmental selection factors, characteristics that lead to both marital separation and offspring functioning. Method: We used the Children of Twins (CoT) Design to explore whether unmeasured genetic or environmental factors related to the twin parent, and measured characteristics of both parents, account for the association between parental divorce and offspring substance use and internalizing problems. Results: The association between parental divorce and offspring substance use problems remained robust when controlling for genetic and environmental risk from the twin parent associated with parental divorce, and measured characteristics of both parents. The results do not prove, but are consistent with, a causal connection. In contrast, the analyses suggest that shared genetic liability in parents and their offspring accounts for the increased risk of internalizing problems in adult offspring from divorced families. Conclusions: The study illustrates that unmeasured genetic and environmental selection factors must be considered when studying parental divorce. In explaining associations between parental divorce and young-adult adjustment, our evidence suggests that selection versus causal mechanisms may operate differently for substance abuse (a causal relation) and internalizing problems (an artifact of selection). The CoT design only controls for the genetic and environmental characteristics of one parent; thus, additional genetically informed analyses are needed.