Anchored in structural family systems theory, this study investigated the role of psychological individuation during young adulthood in mediating the relationship between growing up in families with diffuse boundaries and poor psychological health outcomes. A sample of 404 young adults was recruited to reflect relatively equal numbers of individuals raised in two-parent married households and those who had experienced their parents' separation by age 14. Participants completed self-report questionnaires to assess specific types of cross-generational boundary diffusion in the forms of parentification and triangulation experienced in their adolescence, individuation, and general psychological and relationship adjustment. Experiences of boundary diffusion were commonplace recollections for young adults with divorced parents, revealing a large effect size in comparison to young persons raised in intact families. As expected, individuation mediated the significant relationship between boundary diffusion, especially in the form of triangulation, and psychological and relationship adjustment outcomes. The role of gender was explored.