The current study filled significant gaps in our knowledge of developmental psychopathology by examining the influence of multilevel risk factors and developmental assets on longitudinal trajectories of internalizing symptoms and self-esteem in an exceptionally culturally diverse sample of rural adolescents. Integrating ecological and social capital theories, we explored if positive microsystem transactions are associated with self-esteem while negative microsystem transactions increase the chances of internalizing problems. Data came from the Rural Adaptation Project, a 5-year longitudinal panel study of more than 4,000 middle school students from 28 public schools in two rural, disadvantaged counties in North Carolina. Three-level hierarchical linear modeling models were estimated to predict internalizing symptoms (e.g., depression, anxiety) and self-esteem. Relative to other students, risk for internalizing problems and low self-esteem was elevated for aggressive adolescents, students who were hassled or bullied at school, and those who were rejected by peers or in conflict with their parents. Internalizing problems were also more common among adolescents from socioeconomically disadvantaged families and neighborhoods, among those in schools with more suspensions, in students who reported being pressured by peers, and in youth who required more teacher support. It is likely that these experiences left adolescents disengaged from developing social capital from ecological microsystems (e.g., family, school, peers). On the positive side, support from parents and friends and optimism about the future were key assets associated with lower internalizing symptoms and higher self-esteem. Self-esteem was also positively related to religious orientation, school satisfaction, and future optimism. These variables show active engagement with ecological microsystems. The implications and limitations were discussed.