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Using a three-wave longitudinal data set of Mexican-origin adolescents (N = 602, Mage = 12.92, SD = 0.91 at Wave 1), this study examines parallel pathways from early exposure to ethnic discrimination and drug-using peers, separately, to underage drinking status by late adolescence. Negative affect was expected to mediate the link from ethnic discrimination to underage drinking status (the stress-induced pathway), whereas social alcohol expectancy was expected to mediate the link from drug-using peers to underage drinking status (the socialization pathway). Our findings lend support to the stress-induced pathway while controlling for the socialization pathway. For the stress-induced pathway, we found that early ethnic discrimination experiences were related to higher likelihood of having engaged in underage drinking by late adolescence through elevated negative affect sustained across adolescence. For the socialization pathway, we found no association between affiliation with drug-using peers in early adolescence and underage drinking status, either directly or indirectly. Present findings highlight the unique role of early ethnic discrimination experiences in underage drinking among Mexican-origin adolescents, over and above the effect of drug-using peers. Alcohol use interventions targeting ethnic minority adolescents should account for adolescents' ethnic discrimination experiences by helping adolescents develop adaptive coping strategies to handle negative affect induced by discrimination (e.g., reappraisal) rather than using alcohol to self-medicate.