Personal events included disruptive and beneficial life experiences, whereas neighborhood stress related to gang involvement and perceived neighborhood toughness. The survey received responses from 82 percent of the total enrollment of 1,731 students. The research developed analyses to examine the elements of several crucial measures of psychosocial functioning to moderate relations between life events, neighborhood stress, and alcohol use. Results revealed that positive outcomes (e.g., family communication) and internal health locus of control buffered the effects of negative life events on alcohol use. In addition, high levels of absenteeism from school exacerbated the effects of neighborhood stress on alcohol use. Moreover, both positive and negative life events and neighborhood stress uniquely predicted for alcohol use, controlling for risk, gender, and ethnicity. Findings suggested the need to extend current causal models to include stressful life events and contextual factors as predictors of early-stage alcohol use. Tables, figures, notes, and 86 references (Author abstract modified)