The use of endophenotypes to classify individuals at risk for or suffering from psychopathology has been criticized for lacking specificity and predictive utility. This issue is apparent in research on externalizing, a heritable predisposition to disinhibitory psychopathology and personality traits. Numerous studies have shown that P3 amplitude reduction (P3AR) reliably reflects externalizing, implicating P3AR as a candidate endophenotype for externalizing psychopathology. However, this endophenotype has not been connected directly to a key deficit in executive function (e.g., inhibitory control) commonly related to externalizing. Using a modified oddball task in a sample (N = 74) of at-risk adolescents and young adults, we examined the associations among externalizing, P3AR, and inhibitory control. We also examined the associations of P3AR and inhibitory control with frequency of real-world disinhibited behavior. Results indicated that externalizing related to P3AR, which in turn related to deficient inhibitory control. Additionally, there were both unique and interactive associations of P3 amplitude and inhibitory control with indicators of real-world behavior. These findings provide the first direct evidence that P3AR reflects deficits in inhibitory control, thus linking this externalizing-related endophenotype to a specific cognitive process. Moreover, the results highlight the value of considering psychobiological measures alongside behavioral measures for indexing risk for externalizing behavior and psychopathology.