Rates of substance use and comorbid psychopathology peak during adolescence, highlighting the need to identify transdiagnostic risk processes that cut across conditions and elucidate early embedded risk factors for comorbidity across development. The current review highlights emotion regulation deficits as a core transdiagnostic risk factor underlying the development of substance use, addiction, and comorbid psychopathology in adolescence. We present the dual systems model of neurological development to highlight adolescence as a critical period of increased risk for emotion regulation difficulties, corresponding risk behaviors, and psychopathology. We describe malfunction in the neurobiological regulation system underlying the relationship between emotion regulation and risk for addiction and comorbidity. We pull from two established developmental theories including both the externalizing pathway and the internalizing pathway to substance use disorders, which together highlight how early embedded risk in the form of emotion regulation deficits can explain mechanisms underlying the development of addiction and comorbid psychiatric disorders.