Self-report survey data were collected from 797 adolescents (47.2% Latino, 52.8% Black) in North Carolina. Path analyses were conducted to examine relationships between youth perceptions of maternal and paternal monitoring, neighborhood crime/drugs, friends’ delinquency, peer victimization, minor substance use, and major substance use. After establishing a good fitting model, multigroup models were conducted for Blacks vs. Latinos. The results indicated perceived maternal monitoring (and paternal monitoring for Latinos) was directly related to decreased exposure to neighborhood crime/drugs and friends’ delinquency. For Latinos and Blacks, maternal and paternal monitoring were directly related to gateway substance use, and indirectly related to major substance use through gateway substance use. Additionally, friends’ delinquency and peer victimization were directly related to gateway and major substance use for Blacks and Latinos. Thus, exposure to neighborhood crime/drugs was indirectly related to substance use through friends’ delinquency and peer victimization.