Young adulthood is a period of increased mental health risk, with evidence linking psychological disorder to problematic role transitions. To our knowledge, there has been little or no research that examines the forces shaping minority mental health at this time. Using a diverse, urban sample of young adults who are followed over a two-year period, this paper examines the link between race/ethnicity and depressed mood and the transitional roles and interpersonal experiences that mediate this association. Findings indicate that blacks and Hispanics have elevated depressed mood relative to whites and Asian Americans, independent of socioeconomic background factors. The underrepresentation of blacks and Hispanics in four-year colleges largely explains the differences in depressed mood between members of these groups and Asian American youth. In contrast, comparisons of black and Hispanic youth to white youth highlight problems in peer and parental relations among individuals in the former groups. Overall, findings suggest that the heightened depressed mood among Hispanics and blacks relative to whites and Asian Americans reflects their increasingly disadvantaged pathways into adulthood, characterized by poorer prospects for educational advancement and more problematic relationships subsequent to the high school years.