This randomized clinical trial evaluated a family-based therapy and a peer group therapy with 80 urban, low-income, and ethnically diverse young adolescents (11 to 15 years) referred for substance abuse and behavioral problems. Both treatments were outpatient, relatively brief, manual-guided, equal in intervention dose, and delivered by community drug treatment therapists. Adolescents and their parents were assessed at intake to treatment, randomly assigned to either MDFT or group therapy, and reassessed at six weeks after intake and at discharge. Results indicated that the family-based treatment (MDFT, an intervention that targets teen and parent functioning within and across multiple systems on a variety of risk and protective factors) was significantly more effective than peer group therapy in reducing risk and promoting protective processes in the individual, family, peer, and school domains, as well as in reducing substance use over the course of treatment. These results, which add to the body of previous findings about the clinical and cost effectiveness of MDFT, support the clinical effectiveness and dissemination potential of this family-based, multisystem and developmentally-oriented intervention.