Friendships are a mental health resource for adolescents. Their availability and strength have been shown to predict lower levels of depression, higher self-esteem, and higher life satisfaction. They can also alleviate the stress that often leads to negative mental health outcomes. However, studies examining the stress process rarely consider the fact that social networks like friendship groups are not a static resource that effects all people the same way. Rather, demographic characteristics of both the individual and their friends could change the role of friendship networks within the stress process. In this thesis, I investigate the importance of one such demographic characteristic: race. Racial and ethnic diversity continues to grow in the United States, contributing to an increase interracial and interethnic friendships. It is important to understand what impact racial difference might have on the stress process. In addition to using Leonard Peralin's stress process model to understand these potential effects, I draw upon Gordon Allport’s Contact theory to inform my analysis. Contact Theory attempts to explain why and how intergroup contact leads to changes in racial attitudes. Increases in positive racial attitudes may lower unique stressors often experienced my racial minorities such as racial prejudice and acculturation. This research project provides a starting point for deeper analyses examining how contact theory and the stress process function together. I ask if racially diverse friendship networks affect adolescent mental well being (as measured by mental health and self-esteem) and if the race of the respondent moderate the effects of racial diversity in friendship networks on mental well-being. To answer these questions, I perform secondary data analysis of survey responses from The National Longitudinal Study of Adolescent to Adult Health. I use public-use, cross-sectional data of adolescents from Wave 1 ('94-'95). Linear regression models predicting adolescent mental health found that racial difference in friendship networks is negatively associated with mental health for white adolescents. For Asian respondents, linear regression models found that racial difference in friendship networks was positively associated with both mental health and self-esteem. Results on Hispanic, Black, and "Other" race adolescents were non-significant. These results suggest that racial difference in friendship networks have varying associations on mental well-being that depend on the race of the adolescent. White adolescents with more diverse friend groups may experience increased stress resulting from an increased awareness of the racial prejudice that affects their friend's lives. Asian adolescents may benefit from more diverse friend groups because it allows them to find a "sense of belonging" in environments where there is less opportunity to have same-race friendship networks. They also might face less discrimination from different-race peers, allowing the social support benefits of a racially different friendship networks to outweigh any increases in perceived discrimination from peers. The results indicate that future studies should continue studying how demographic characteristics influence the stress process, including the role of social networks. Policies should aim to provide educational resources teaching adolescents how to handle experiences of prejudice and to create positive points of contact for different race peers. Future studies should assess the validity of these results by performing longitudinal analyses that can provide information on how racially different friendship networks buffer specific stressors and discover if the relationships found in this analysis change over time.