Although substance abuse has for many years been documented as a serious problem among homeless populations, there is as yet no clear understanding of the nature of the relationship between substance abuse and homelessness. We evaluate alternative social selection and social adaptation models of this process. Using data from a random probability sample, the substance abuse and homeless experiences of 303 homeless people and people at risk of homelessness in Cook County, Illinois, were investigated. Proportional hazards regression models were employed to assess both social selection and social adaptation models. Drug but not alcohol abuse was associated with first homeless episode. Prior homeless experiences were found to be predictive of first symptoms of both alcohol and drug abuse. Other variables, including the availability of social and economic resources, were also associated with each of these outcomes. Models of both selection and adaptation processes are necessary to account for the association between homelessness and substance abuse, indicating that a multi-directional model is more appropriate. In addition findings suggest that, in recent years, drugs may have displaced alcohol as an important precursor of homelessness for many individuals.