Contemporary biological and contextually based theoretical frameworks have conceptualized how stress exposure may influence adaptation in youth. However, nearly all of this scholarship neglects the role of specific contextual features and/or biological processes that are involved in ethnic-racial minority youth’s responses and adaptation to sociocultural stressors. Drawing on the theoretical principles of the developmental psychopathology framework and contemporary models of stress and adaptation, this article proposes a new multisystem model that explains how multiple levels and systems within and outside of individual youth influence their sociocultural adaptation. We provide empirical evidence to support components of this multisystem model. We propose that research based on our new theoretical framework will capture the sociocultural experiences of ethnic-racial minority youth by centering processes that are relevant to their lived experiences, coping, and adjustment. In doing so, this model will inform psychosocial interventions focused on promoting healthy adaptation among ethnic and racial diverse youth. Finally, we offer recommendations to guide future research on stress and adaptation among ethnic and racial diverse youth, in particular, and developmental psychopathology more broadly.