Mitigating and preventing substance use among adolescents requires approaches that address the multitude of factors that influence this behavior. Such approaches must be tested, not only for evidence of empirical effectiveness, but also to determine the mechanisms by which they are successful. The aims of the present study were twofold: 1) To determine the effectiveness of a school-based social-emotional and character development (SECD) program, Positive Action (PA), in reducing substance use (SU) among a sample of U.S. youth living in a low-income, urban environment, and 2) to test one mechanism by which the program achieves its success. We used longitudinal mediation analysis to test the hypotheses that: 1) students attending PA intervention schools engage in significantly less SU than students attending control schools, 2) students attending PA intervention schools show significantly better change in SECD than students attending control schools, and 3) the effect of the PA intervention on SU is mediated by the change in SECD. Analyses revealed program effects on both SECD and SU, a relationship between SECD and SU, and the effects of PA on SU were completely mediated by changes in SECD. Future research directions and implications for school-based social-emotional and character development efforts and substance use prevention are addressed.