The current study examined the one-year prevalence of psychiatric disorders for Hispanics and Caucasians in a large population sample (N=4559) and explored factors that contributed to group differences. Hispanic participants (predominantly Mexican Americans) were more likely than Caucasian participants to have met the criteria for a psychiatric diagnosis in the past year, had higher one-year prevalence rates of several anxiety disorders, had greater problems meeting their basic needs, and better interpersonal functioning. Hispanic participants' problems meeting basic needs partially mediated their higher prevalence of psychiatric disorders compared to Caucasian participants. Better interpersonal functioning protected Hispanic participants against depression, panic, and substance use disorders. These findings are discussed in terms of the importance of psychosocial variables for the prevalence of psychiatric disorders.