The present study was designed to examine the relationships of (a) changes in adolescent-reported family functioning and (b) changes in identity confusion to onset of substance use and sexual behavior in a sample of 250 Hispanic adolescents from immigrant families. Adolescents were followed for three years, with assessments conducted at baseline and at 6, 12, 24, and 36 months post-baseline. Results indicated that adolescents whose identity confusion scores increased over time were most likely to initiate cigarette use, alcohol use, and sexual behavior during the course of the study. Adolescents whose identity confusion scores remained stable over time were less likely to initiate, and adolescents whose identity confusion scores decreased over time were least likely to initiate. Initial levels of and changes in family functioning appeared to be responsible for these associations. Implications for identity research and intervention are discussed.