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Aims. It was hypothesized that adolescent substance dependence moderates the relationship between family history of alcohol dependence and neuropsychological functioning. Design. This study compared the neuropsychological functioning of nonabusing and alcohol and drug-dependent adolescents with and without a family history of alcohol dependence using hierarchical multiple regressions and general factorial analyses. Setting. Substance-dependent adolescents were recruited and tested in inpatient alcohol and drug abuse treatment programs after 3 weeks of abstinence. A matched sample of non-abusing adolescents was recruited from the same San Diego-area communities. Participants. Substance-dependent adolescents (n = 101) met DSM-III-R criteria for dependence on alcohol and at least one other substance. Non-abusing adolescents (n = 50) had no substance use disorders. Groups were comparable on socio-economic status. Participants were 44% female, ages 13-18, and had no serious head injuries or neurological disorders. Measurements. Information was gathered on demographics, family history, substance involvement, and conduct disorder behaviors and adolescents were administered neuropsychological tests covering language, visuospatial, verbal memory, attention and executive functioning domains. Findings. The hypothesis was supported for language and attention tests. Substance involvement interacted with family history of alcohol dependence to predict language and attention functioning. Family history negative non-abusers performed better than the other adolescents. Conclusions. The pattern of results suggests that family history of alcohol dependence and adolescent substance use are separate risk factors for poorer neuropsychological performance in youth.