The current study explores perceived discrimination and ethnic identity as predictors of delinquency and substance use among adolescent immigrants in Israel. Theoretically, the study draws from strain theory, immigration-related theories of ethnic identity formation in adolescence, bi-dimensional theories of acculturation, and the rejection-identification model. The study involved 250 adolescents, 140 from the Former Soviet Union (FSU) and 110 from Ethiopia, aged 15 to 18 years (M = 16.7 years). Adolescents were assessed on substance use (cigarettes, marijuana, binge drinking, drunkenness), delinquent behavior, parental relationships (support, limit setting), perceived discrimination, host identity (Jewish Israeli), and ethnic identity (Russian/Ethiopian). Results from structural equation modeling showed that delinquency was predicted directly by greater discrimination, a weaker ethnic (Russian/Ethiopian) identity, and greater substance (alcohol and cigarette) use. Higher levels of parental limit setting and lower levels of parental support predicted higher levels of substance use, but only predicted delinquency indirectly through their impact on substance use. Findings support the hypotheses that perceived discrimination and a weaker ethnic identity predict involvement in delinquency and partially support a hypothesis that higher levels of a positive host identity are related to lower levels of substance use and delinquency among immigrant adolescents. A perceived lack of equal opportunities may lead to stress, anger, and frustration toward society leading to delinquent behavior, whereas difficulties in consolidating a positive cultural identity may lead the young adolescent to fill a void through substance use.