Objective: Adolescence, a turbulent time marked by stress and rapid changes, making teenagers more susceptible to psychological issues. Socioeconomic factors, particularly poverty, further exacerbate these problems. Conversely, most African societies, including Ethiopia, have a potential untapped social capital resources rooted in socio-cultural values and norms that can be used to care and support vulnerable and disadvantaged groups of the society. Thus, this article aims to uncover the contributions of such resources and institutional support for the psychological adjustment and school competence of disadvantaged adolescents in Addis Ababa, Ethiopia. Method: SEM based structural path analysis was employed to test the possible direct and indirect effects. Results: The study found significant correlations between variables, explaining 37% and 61% of the variance in psychological adjustment and school competence respectively. Path analysis showed significant direct and indirect effects, revealing that institutional support indirectly affects psychological adjustment and school competence through family and peer social capital. Institutional support improves psychological adjustment by fostering family social capital resources, but it exacerbates problem behaviors and lowers adolescent psychological adjustment through peer influence. It also positively impacts adolescents' school competence by enhancing peer social capital resources. Conclusion: The results suggested that institutional support has an essential indirect influence on the psychological adjustment and school competence of disadvantaged adolescents through social capital variables. Thus, future studies are needed to fully understand the role different social contexts and social support in protecting and improving the wellbeing of vulnerable children and adolescents in Ethiopia.