The study used data from the RAND Adolescent Panel Study. The panel study was conducted to evaluate Project ALERT, a drug prevention program for middle school children. The panel originally included seventh grade students from 30 California and Oregon middle or junior high schools. The baseline sample in 1985 consisted of 6,527 participants (48 percent girls and 52 percent boys). Five years later, 4,390 respondents (54 percent girls and 46 percent boys) completed a follow-up survey. The racial/ethnic composition of the study sample was 71 percent white, 8 percent black, 9 percent Latino, 9 percent Asian, and 3 percent multiracial/ethnic or Native American. Logistic regression analyses showed that frequency of cigarette use during seventh grade predicted dropping out of high school, controlling for demographics, family structure, academic orientation, early deviance, and school environment. Separate analyses by race/ethnicity replicated this finding for Asians, blacks, and whites, but not for Latinos. For Latinos, early marijuana use predicted dropping out. The results suggest that preventing or reducing the incidence of early smoking and marijuana use may help reduce the probability of dropping out of high school. 5 tables and 57 references