Policy makers are especially concerned about persistently high dropout rates among U.S. Latinos, the largest minority population in the United States. This study used a national longitudinal database to show that the behavioral and social aspects of schooling are dynamically linked in the process of school completion and dropout among Mexican American and non-Latino white adolescents. In contrast to the tendency of academically disengaged students to develop street-oriented friendships, students who are involved in school tend to befriend others who also make schooling a priority. Thus, student engagement influences competing friendship networks in a manner that contributes to the completion of school. Furthermore, engagement behaviors and school-oriented friendship networks have the potential to reduce dropout rates. To their social and educational detriment, however, Mexican American students appear to be less engaged in unorganized academic endeavors and formally sponsored extracurricular activities than are white students. The results of this study support policies that combine targeted educational and social reforms to bolster school completion among Mexican origin youths. (Contains 5 tables, 3 figures and 30 notes.)