This study explored the interactive effect of substance abuse and depression on social competence among 106 adolescent inpatients (57% female, 86% Caucasian). Substance abuse and depression were conceptualized using dimensional ratings of illness severity based on adolescent interviews, whereas social competence was conceptualized using parent ratings of adolescent behavior. Cross-sectional analyses revealed that substance abuse and depression had a negative interactive effect on adolescent social competence: Higher severity levels of both dimensions were associated with lower levels of competence than accounted for by the additive effects of the two dimensions. These findings persisted when controlling for gender, race, and other common dimensions of psychopathology. Significant impairment in social competence occurred at subdiagnostic levels of substance abuse when depression severity was high, highlighting the value of assessing outcomes across the full range of severity.