Substance use by welfare recipients is frequently mentioned as an important barrier to well-being and social performance. This article uses nationally representative cross-sectional data and Michigan-specific panel data to summarize trends in substance use among Aid to Families with Dependent Children (AFDC) and Temporary Assistance to Needy Families (TANF) recipients. It also examines the prevalence of substance dependence within the welfare population. Although almost 20 percent of welfare recipients report recent use of some illicit drug during the year, only a small minority satisfy criteria for drug or alcohol dependence, as indicated by the short-form Composite International Diagnostic Interview. Illicit drug use and dependence and alcohol dependence are more common among women receiving welfare than among women who do not. For mothers who used cocaine, 59 percent received AFDC/TANF for at least 5 years and 75 percent experienced some period of welfare receipt. Drug use is a risk factor for welfare receipt. The article concludes by considering policy responses to substance use disorders following welfare reform. (Contains 52 references and 9 endnotes.) (SM)