Data from a nationally representative sample of 13,470 children aged 4–11 years were used to study contextual influences on children’s mental health and school performance, the moderating effects of family immigrant status and underlying family processes that might explain these relationships. Despite greater socioeconomic disadvantage, children living in recent immigrant families had lower levels of emotional–behavioral problems and higher levels of school performance. Living in a neighborhood characterized with higher concentration of immigrants was associated with lower levels of emotional–behavioral problems among children living in immigrant families; the reverse was true for children living in nonimmigrant families. These differences are partially explained by family process variables. The implications of these findings for future research and policy are discussed.