How do neighborhoods affect the health of residents? We propose that the impact of neighborhood disorder on self-reported health is mediated by psychological and physiological distress. We hypothesize a stress process in which chronic stressors in the environment give rise to a psychological and physiological stress response that ultimately affects health. The exogenous variable of interest is the neighborhood where disadvantaged persons live, which may expose them to chronic stressors in the form of crime, trouble, harassment, and other potentially distressing signs of disorder and decay. The mediator is the stress response that occurs in the body and brain. Of interest here is a psychological stress response in the form of fearful anxiety and depression, and a physiological stress response in the form of signs and symptoms of autonomic arousal, such as dizziness, chest pains, trouble breathing, nausea, upset stomach, and weakness. The outcome is poor health. This model is supported using data from the Welfare, Children, and Families project, a sample of 2,402 disadvantaged women in disadvantaged neighborhoods in Chicago, Boston, and San Antonio.