The study examined the role of child characteristics, diagnosis status, and placement type on SU behavior in 260 youth (aged 12 to 18 years old) enrolled in foster care in a multilevel analysis accounting for the influence of Level 2 variance from caregiver reporter. The gender distribution of participants was approximately equal (46% female), with an average age of 15.03 years (Sd=1.90 years). Based on caregiver report 22% of youth had used alcohol and 27% had used drugs. Findings revealed that 15% of observed variation in drug use and 19% of observed variation in alcohol use was due to differences at Level 2, identified as differences across foster parents and residential staff. A model building strategy was employed, starting with age as a predictor and adding in placement type, gender, and then diagnostic status. In models accounting for Level 2 contribution to variance in outcomes, examination of AIC/BIC values and chi-square difference tests revealed a significant predictive relation of placement type, age, and diagnosis status on SU behavior. Gender did not emerge as a significant predictor. These findings suggest factors traditionally known to relate to SU in youth (i.e., age, comorbid diagnoses) as well as factors specific to youth in foster care (i.e., placement type) contribute significantly to variance in SU behavior; consequently, a more specific look at how intervention and prevention strategies may influence SU outcomes for youth residing in foster care placements may be necessary. For example, gender was nonsignificant in this sample suggesting that approaches for prevention or intervention need to target males and females. Further, given emerging evidence for higher rates of SU in youth in residential placements, prevention strategies designed for these youth may be more effective than global strategies for all youth in care.