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Objective Living in a dangerous and disadvantaged neighborhood is consistently linked with poor health outcomes; however, few studies have investigated psychosocial mechanisms of this relationship. We hypothesized that a specific facet of depression—anhedonia—would partially explain the relationship between stressful neighborhoods and poor health in youth with asthma. Method 156 youths provided reports on their depressive symptoms, daily asthma symptoms, and peak expiratory flow rate (PEFR). Caregivers provided reports on neighborhood characteristics. Results Youth residing in more at-risk neighborhoods experienced more symptoms of depression, greater asthma symptoms (both during the day and night), and marginally lower PEFR. Indirect effect analyses revealed that the relationship between neighborhood stress and youth asthma symptoms was partially explained by a key symptom of depression, anhedonia. Conclusions These findings suggest that the neighborhood-health link is partially explained by symptoms of depression tapping into difficulties experiencing pleasure and motivation.