Ethnic identity is an essential component of youths' sense of self and is influenced by social relationships and experiences. Despite the large amount of time adolescents spend in the school environment and with their peers, little is known about the influence of the overall school context on ethnic identity development. This study examined the direct and indirect effects of sixth grade school context (defined by negative peer relationships and school environment) on ethnic identity development and depression in ninth grade. Using cross-lagged analysis, the bidirectional impact of discrimination experiences on ethnic identity development was also explored. These relationships were also examined separately for European American youth, youth of color with one ethnicity, and multiethnic adolescents. For all adolescents, less negative peer relationships were related to higher ethnic identity level. Ethnic identity was also positively associated with later adolescent depression. In addition, school environment was related to ethnic identity development for European American and adolescents of color; for youth of color with one ethnicity, ethnic identity also predicted later depression levels. School context was not found to be associated with ethnic identity development for multiethnic adolescents, although negative relationships were related to higher depression levels for this group. Finally, the cross-lagged model of ethnic identity and discrimination suggested no bidirectional influence between these two variables. This study supports existing studies on the importance of ethnic identity on adolescent development. It also provides much needed knowledge of how the school context contributes to adolescent ethnic identity and depression. Furthermore, these findings contribute to the growing body of literature on the developmental trajectories of multiethnic adolescents. Findings from this study have implications for intervening at the school level. Promoting cultural sensitivity among students and staff can decrease negative peer interactions (e.g., bullying) and other negative social experiences, thereby decreasing the risk of poor academic and psychological outcomes for adolescents at risk of experiencing adversity.

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