Residents of urban American neighborhoods facing economic hardship often experience individual and collective adversities at high levels. This study explores how racially diverse adults experience stress, adversity, and trauma, and how they cope and heal in the context of their environment. Following a critical realist grounded theory methodology, four focus groups were conducted with African American, White and Latinx participants (N = 21) within an employment service program.Participants identified key stressors ranging from financial and job challenges, violence, and trauma. To cope with and heal from adversity, they practiced positivity, named trauma and its effects, sought social connection, envisioned community-based resources, and addressed structural and systemic barriers. The data generated a theory of "a mutual process of healing self and healing the community" through intrapersonal, interpersonal, and structural change. The results of this study indicate a need for peer-led, community-engaged initiatives and holistic, trauma-informed, healing-centered practices.This study was approved by the institutional review board of the University of Wisconsin-Milwaukee, in accordance with human subjects protections standards.All participants of this study were enrolled with an informed consent process, and pseudonyms were used for all participants and the program from which they were recruited.