There are many reasons for believing that the environment exerts an influence (directly or indirectly) on the wellbeing of children and families. However, while clear evidence is available that low socioeconomic status is associated with lower than average levels of wellbeing, especially among adults, the evidence linking the social and emotional adjustment of children with the quality of the environment is patchy and equivocal. In this paper we focus on three levels of the family environment: the street, the home and the neighborhood. Neighborhood quality was measured by the Vinson-Homel social problems index, street-type as residential or commercial/retail, and housing quality in terms of upkeep, floor occupied, availability of playspace and occupancy type. The research hypothesis was that after allowing for community selection processes children living in lower quality environments would be less satisfied with various areas of their lives, would experience more negative emotions, and would have more restricted and less positive friendship patterns. The sample comprised 321 families which included a 9-11 year old child, drawn from 18 neighborhoods of Sydney. Neighborhood social problem score and street-type, and some aspects of housing, predicted emotional and social adjustment. Before and after controls for family composition, social class and culture, children living in commercial streets, particularly in inner-city areas, stood out from all others in their feelings of loneliness, dislike of other children and feelings of rejection, worry, fear, anger and unhappiness. Children living in high social problems areas showed a pattern of social constriction rather than maladjustment. These results suggest not simply the influence of social class but genuine community socialization effects. Possible sources of, and mechanisms for, these effects are suggested.