Neighborhood conditions are related to children's externalizing behavior, although few processes that help explain this association have been identified. With data from 189 primarily low-income Anglo and Mexican American families, we tested a stress process model that included 3 potential mediators of this relationship. The results showed that child stressful life events, association with deviant peers, and parent-child conflict mediated the relationship between neighborhood context and child externalizing behavior when household income and maternal depression were controlled. The model explained more than 25% of the variance in externalizing behavior. Furthermore, differences in results for families with a U.S.-born versus Mexico-born mother showed that neighborhood influences on families and children may be quite complex.