OBJECTIVE: Prior research has suggested that drug use rates may be high at the U.S.-Mexico border, but in more recent research rates varied significantly between border communities. This study reports findings on the mediating influence of neighborhood-level variables on the observed difference in past-year drug use rates between two border sites and an interior site, focusing on Mexican Americans. METHOD: Data were analyzed from the U.S.-Mexico Study on Alcohol and Related Conditions (UMSARC) on 1,345 Mexican-origin respondents ages 18-40 from the border sites of Laredo and Brownsville/McAllen compared with the nonborder site of San Antonio, separately for men and women. Neighborhood-level variables (based on census tracts and block groups) included drug availability, neighborhood insecurity, crime victimization, crime witnessing, off-premise alcohol outlet density, on-premise alcohol outlet density, percentage crossing the border more than 100 times, neighborhood disadvantage, residential stability, and percentage of White/non-Hispanic. RESULTS: When individual sociodemographic characteristics were controlled for, lower drug use among men in Brownsville/McAllen (vs. San Antonio) was partially mediated by lower drug availability and lower perceived neighborhood insecurity whereas increased drug use among women in both Laredo and Brownsville/McAllen was partially mediated by the lower proportion of White/non-Hispanic residents compared with San Antonio. CONCLUSIONS: Neighborhood-level variables partially explain the heterogeneity in drug use across sites at the U.S.-Mexico border, but different factors appear to be operating for men compared with women. These findings suggest the potential importance of addressing neighborhood factors in reducing drug-related harm at the U.S.-Mexico border.