Demoralization is a concept that evolved out of the study of individuals under stress. It is defined as the combination of distress and subjective incompetence in the presence of inadequate social bonds. When patients with alcohol abuse problems are diagnosed with cancer they may become demoralized and be unable to summons adequate resources to address issues associated with changing their addictive behavior. The Stage of Change Model (SOC), one of the primary approaches in addiction therapy, is used to guide individuals through the process of behavioral change. This two phase study examined the relationship between demoralization and stage of change. The fist phase was a retrospective chart review (N =112) intended to establish the psychometrics of a new instrument measuring the subjective incompetence component of demoralization. The twelve item Subjective Incompetence Scale (SIS) demonstrated strong internal consistency (.92) and strong indices of being a reliable and valid measure. As expected there was a weak relationship in a positive direction with pain and confusion, a moderate and positive relationship with avoidant coping, and a strong and positive relationship depression, anger and fatigue. There was a moderate and negative correlation with apathy which was also in the direction expected. Phase two was a correlational study using a survey research design, aimed at examining the relationship between alcohol use, depression, level of demoralization and stage of change. The study was done on a convenience sample of patients in colorectal and gastrointestinal clinics at H. Lee Moffitt Cancer Center (N=71). Depression and demoralization were found to be distinct but related constructs. Level of alcohol consumption was not correlated with SOC. The components of demoralization were regressed on Stage of Change to determine their predictive value. Social support (ISELSF), perceived stress (IES) and subjective incompetence (SIS) resulted in a significant increment in variance explained ( R2 ). The whole model produced R2 =.284, F (7, 53) = 2.847, p =.013 which explained a significant portion of the variance in stage of change. Implications for practice and directions for future research are discussed.