Past studies using acculturation to predict substance use in immigrants have yielded mixed findings, suggesting support for both acculturative and assimilation theories of substance use in immigrants. In this investigation, two variables from the cross-cultural literature, Marginalization and Perceived Discrimination, were used to examine the predictions of these theories. First- and second-generation Indian-Americans were recruited and completed questionnaires measuring quantity, frequency, and negative consequences of drug / alcohol use, Perceived Discrimination, and Marginalization. Information on demographics and depressive symptoms were used as covariates. Hierarchical regression and correlation analyses indicated that lower levels of Marginalization significantly predicted higher rates Alcohol Use in the first-generation; conversely, higher levels of Perceived Discrimination were significantly associated with increased Drug Use in the second-generation. It was concluded that both assimilation and acculturative theories may have merit for identifying substance users in an Indian-American sample when generation is considered as a moderator.