Although research has found that urban youth are exposed to excessive levels of community violence, few studies have focused on the factors that alter the risk of exposure to violence or the processes through which youth who are exposed to community violence do better or worse. This study investigates the risk of exposure to community violence and its relation to violence perpetration among a sample of 263 African American and Latino male youth living in inner-city neighborhoods. The study also examines the role that family functioning plays in moderating the risk. The study finds that youth from struggling families—those that consistently used poor parenting practices and had low levels of emotional cohesion—were more likely to be exposed to community violence. It also finds a relation between exposure to violence and later violence perpetration. However, youth exposed to high levels of community violence but living in families that functioned well across multiple dimensions of parenting and family relationship characteristics perpetrated less violence than similarly exposed youth from less well-functioning families.