Developmental models highlight the impact of early risk factors on both the onset and growth of substance use, yet few studies have systematically examined the indirect effects of risk factors across several domains, and at multiple developmental time points, on trajectories of substance use and adult adjustment outcomes (e.g., educational attainment, mental health problems, criminal behavior). The current study used data from a community epidemiologically defined sample of 678 urban, primarily African American youth, followed from first grade through young adulthood (age 21) to test a developmental cascade model of substance use and young adult adjustment outcomes. Drawing upon transactional developmental theories and using growth mixture modeling procedures, we found evidence for a developmental progression from behavioral risk to adjustment problems in the peer context, culminating in a high-risk trajectory of alcohol, cigarette, and marijuana use during adolescence. Substance use trajectory membership was associated with adjustment in adulthood. These findings highlight the developmental significance of early individual and interpersonal risk factors on subsequent risk for substance use and, in turn, young adult adjustment outcomes.