Despite the rapidly growing Mexican American population, no studies to date have attempted to explain the underlying relations between family instability and Mexican American children's development. Using a diverse sample of 740 Mexican American adolescents (49% female; 5th grade, M age = 10.4 years; 7th grade, M age = 12.8 years) and their mothers, we prospectively examined the relations between family instability and adolescent academic outcomes and mental health in the 7th grade. The model fit the data well and results indicated that family instability between 5th and 7th grade was related to increased 7th-grade mother-adolescent conflict, and, in turn, mother-adolescent conflict was related to decreased school attachment and to increased externalizing and internalizing symptoms in the 7th grade. Results also indicated that 7th-grade mother-adolescent conflict mediated the relations between family instability and 7th-grade academic outcomes and mental health. Further, we explored adolescent familism values as a moderator and found that adolescent familism values served as a protective factor in the relation between mother-adolescent conflict and grades. Implications for future research and intervention strategies are discussed.