Mental health functioning in American Indian youth is an understudied topic. Given the increased rates of depression and anxiety in this population, further research is needed. Using multiple group structural equation modeling, the current study illuminates the effect of ethnic identity on anxiety symptoms, depressive symptoms, and externalizing behavior in a group of Lumbee adolescents and a group of Caucasian, African American, and Latino/Hispanic adolescents. This study examined two possible pathways (i.e., future optimism and self-esteem) through which ethnic identity is associated with adolescent mental health. The sample (N = 4,714) is 28.53% American Indian (Lumbee) and 51.38% female. The study findings indicate that self-esteem significantly mediated the relationships between ethnic identity and anxiety symptoms, depressive symptoms, and externalizing behavior for all racial/ethnic groups (i.e., the total sample). Future optimism significantly mediated the relationship between ethnic identity and externalizing behavior for all racial/ethnic groups and was a significant mediator between ethnic identity and depressive symptoms for American Indian youth only. Fostering ethnic identity in all youth serves to enhance mental health functioning, but is especially important for American Indian youth due to the collective nature of their culture.