Adolescents of color experiencing chronic environmental stress are at an increased risk for adverse mental health concerns and problems behaviors. Concepts drawn from the Positive Youth Development (PYD) framework identify internal and external assets that suggest positive outcomes for youth and promote resilience. The present study investigated the relationship between the Five Cs and Sixth C models of PYD (represented by youth competence, confidence, connection, caring, character, and contribution) and the likelihood of anxiety/depressive symptoms and behaviors in conflict with the law among urban youth of color residing in high-stress communities. Data were collected during a longitudinal cross-age peer-mentoring program from a sample of 151 adolescents of color (M = 16). Results indicated that, when combined, youth competence, confidence, connection, caring, character, and contribution predicted decreases in behaviors in conflict with the law over time. Internal PYD dimensions were significantly associated with decreased behaviors in conflict with the law over time, whereas external PYD dimensions were significantly associated with decreased anxiety and depressive symptoms over time. In addition, gender and levels of chronic environmental stress were found to moderate the relationship between PYD and psychosocial outcomes. The findings suggest the value of the PYD framework for understanding psychosocial outcomes for urban youth of color. Limitations of the present study and implications for future research are discussed.