Research suggests that acculturation increases the risk of substance use among Hispanic youth. However, this process is not well understood. This study examined associations between acculturation and several substance use indicators among a sample of 714 Hispanic youth attending alternative high schools in southern California. Peer social influence was assessed as a potential mediator. Acculturation, measured by language use, was associated with increased risk of lifetime alcohol, marijuana, and current alcohol, cigarettes, marijuana, and hard drug use, controlling for age, socioeconomic status, and gender. Results of mediation analyses indicate that peer social influence mediated the relationship between acculturation and lifetime alcohol, and current alcohol, cigarettes, and hard drug use. Evidence for partial mediation was observed with lifetime and current marijuana use. These results provide evidence that peer social influence is an important mediating variable that should be considered when examining the relationship between acculturation and substance use. (Contains 3 tables.)