Adolescent substance abuse results in significant negative outcomes and extraordinary costs for youths, their families, communities, and society. Moreover, rates of psychiatric comorbidity among substance abusing youth range from 25% up to 82%, and youths with a dual diagnosis are more than twice as costly to treat compared to those with no comorbidity. The applicant principal investigator recently completed a pilot project funded by the National Institute on Drug Abuse focused on developing and piloting a psychosocial treatment specifically for youth presenting for outpatient treatment with co-occurring substance use and internalizing (i.e., mood and/or anxiety) problems. Results were promising with the experimental group exhibiting significantly less substance use and more rapid reductions in anxiety and depressive symptoms compared to the control group. The proposed research is a randomized clinical trial (RCT) to compare the experimental treatment (OutPatient Treatment for Adolescents; OPT-A) to an "active placebo" on key clinical indices from pre-treatment through 18 months. The proposed RCT (n = 160) employs the treatment manual, quality assurance protocol, and therapist training protocol developed and successfully tested in the pilot study, to evaluate the efficacy of OPT-A for youth referred to outpatient treatment of co-occurring substance use and internalizing problems. The following outcomes will be evaluated: drug use; mental health; behavioral, school, peer, and family functioning; and consumer satisfaction. The intervention addresses one of the more prevalent and most challenging, costly, and understudied presenting problems among adolescent outpatients. If successful, this research could provide a considerable contribution in the treatment field for youth with co-occurring substance use and internalizing disorders.