Previous research has shown that while African-American youth have lower levels of drug initiation and escalation of use than their Caucasian counterparts, during the transition to adulthood, African-American’s substance use and related problems surpass that of other ethnicities. The current study hypothesized that high rates of high school dropout among African-American youth may be linked to the escalation of substance use during late adolescence and early adulthood for this population. Data were gathered from 1,762 African-American youth who participated in the 1990 and 1992 follow-up surveys of the National Educational Longitudinal Study of 1988. The 1988 survey focused on the impact of family and school on students’ educational, vocational, and behavioral outcomes. Results of path analyses indicated that dropout youth were 1.6 times more likely to use cigarettes and 1.3 times more likely to use marijuana than their counterparts who did not dropout. The relationship between high school dropout and substance use could not be fully explained by prior problem behavior among the dropout youths. Future research should focus on identifying the exact aspects of leaving school in order to inform targeted interventions. Table, figures