Immigrant adolescents have to navigate through a complex social environment consisting of, at least, both a native and a co-ethnic community. This study used a multi-level framework to consider two research questions involving this complexity. The individual-level associations of acculturation orientations and acculturative hassles (language and sociocultural adaptation) was assessed in immigrant youths, and whether this association differs depending on the school-level acculturation orientations held by co-ethnic peers, and the school-level orientations toward immigrants held by native German peers. We then investigated whether acculturative hassles are associated with the psychosocial functioning (self-efficacy, depressive symptoms) of immigrant adolescents. The sample comprised 650 ethnic German Diaspora migrant adolescents (mean age 15.6 years, 53.7 % female) and their 787 native German peers (mean age 15.05 years, 51 % female). The results showed that contextual factors (co-ethnic acculturation orientation, native friendship preferences) moderated the association between the acculturation orientations of adolescent immigrants and both types of acculturative hassles. Acculturative hassles, in turn, were associated with the psychosocial functioning of adolescents. This research demonstrates that a person-by-context perspective is needed to better understand the adaptation of adolescent immigrants. This perspective has to take into account both the native and the co-ethnic peer environment.