The detrimental effects of substance abuse on the individual and on society are well known. Health care resources must target where they are most needed. This study investigated (1) whether the increased risk of being hospitalized for alcohol abuse and drug abuse among certain immigrant groups is present in the next generation and (2) whether having one parent born in the host country (i.e., Sweden) has a protective effect on the risk of being hospitalized for alcohol abuse and drug abuse among second-generation immigrants. In total, 2,243,546 persons aged 20-39 years were followed from 1 January 1992 until 31 December 1999 for first hospital admission due to alcohol abuse or drug abuse. A Cox regression model was used to estimate hazard ratios for each diagnosis group. When the Swedish majority population was used as reference, the highest risks of alcohol abuse and drug abuse were found among first- and second-generation Finns, after adjustment for income. Among second-generation Finns with one parent born in Sweden, the increased risk of being hospitalized for alcohol abuse and drug abuse was lower than among second-generation Finns with both parents born in Finland. Health care resources need to target certain groups of first- and second-generation immigrants.