The aim of this study was to contrast the validity of two opposing explanatory hypotheses about the effect of online communication on adolescents’ well-being. The displacement hypothesis predicts that online communication reduces adolescents’ well-being because it displaces time spent with existing friends, thereby reducing the quality of these friendships. In contrast, the stimulation hypothesis states that online communication stimulates well-being via its positive effect on time spent with existing friends and the quality of these friendships. We conducted an online survey among 1,210 Dutch teenagers between 10 and 17 years of age. Using mediation analyses, we found support for the stimulation hypothesis but not for the displacement hypothesis. We also found a moderating effect of type of online communication on adolescents’ well-being: Instant messaging, which was mostly used to communicate with existing friends, positively predicted well-being via the mediating variables (a) time spent with existing friends and (b) the quality of these friendships. Chat in a public chatroom, which was relatively often used to talk with strangers, had no effect on adolescents’ well-being via the mediating variables.