Research in the area of family studies in the last decade has found a relationship between divorce and negative child outcomes. What is uncertain about this relationship is by what mechanisms does divorce exert its impact on children development. The present study integrates literature on family issues, divorce, and community disorganization and proposes a research model which identifies two mediating variables, parental psychological distress and parenting behavior, by which family structure influences child outcomes. Descriptive statistics and structural equation modeling technique are used to test various study hypotheses. Results show that divorce has adverse consequences for adolescent development indirectly through its impact on parental psychological well-being and parenting behavior for both boys and girls. Part of this relationship between divorce and poor adolescent outcomes is explained by economic pressure and community disorganization. A slightly different pattern of relationship among variables is found between boys' versus girls' models. Specifically, economic pressure has a direct effect on inept parenting for boys, but not for girls; whereas family structure has a direct effect on maternal psychological distress for girls, but not for boys. Policy implications include education for becoming better parents, an Earned Income Tax Credit (EITC) program, and enforcement of child support and alimony awards.