To date, little research is available examining the course and features of recovery from substance abuse following adolescent treatment. The current study evaluated the functioning of 142 teens for 2 years following treatment for substance abuse. Adolescent drug and alcohol outcome was examined in relation to functioning on five major life domains: academic involvement, interpersonal problems, emotional well-being, family relations, and social and occupational activities. Results of this investigation demonstrate that psychosocial functioning is associated with adolescent posttreatment drug and alcohol use. Teens who were abstinent and those with less substance use involvement generally displayed better functioning. The relationship between teen alcohol and drug use and improvement in functioning varied across psychosocial domains. Clinical implications of these findings are discussed along with advances in teen substance abuse research and treatment.