BackgroundThe association between family adversity and young people's mental health outcomes in communities that experience economic instability has not been well explored in the South African context. Furthermore, the overtime interaction between resilience factors, family adversity, and young people's psychological functioning in African settings, like South Africa, is under‐investigated.PurposeThis study investigates the relationship between family adversity and conduct problems and depression at two‐time points in a sample of youths in two South African communities stressed by their dependency on economically volatile oil and gas industries.MethodThis article draws on longitudinal data generated by the Resilient Youth in Stressed Environments (RYSE) study in South Africa, which included 914 and 528 (wave 1 and 3) adolescents and emerging adults (14–27‐year‐olds; M age = 18.36 years) living in Secunda/eMbalenhle and Sasolburg/Zamdela. Participants were sampled at baseline (wave 1) and 18–24 months later (wave 3). They self‐reported experience of community violence, family adversity, resilience‐enabling resources, conduct difficulties, and depression symptoms. Regression analyses were used to examine the unadjusted and adjusted association of family adversity on conduct problem and depression.ResultsAbout 60% of participants reported high family adversity. Regressions, however, revealed no association between family adversity and conduct problems and depression cross‐sectionally and over time. Individual resilience, biological sex, and experience of victimization in the community, however, were associated with conduct difficulty while all three resilience factors were associated with decreased depression among participants.ConclusionOur study sheds light on the risk and protective factors for mental health outcomes of adolescents and youths who reside in volatile, turbulent communities and experience ongoing familial challenges. To effectively support the mental well‐being of young individuals in such contexts, interventions must consider the potential ambivalence of the resilience factors they aim to strengthen.