Growing up in an urban area has been associated with an increased chance of mental health problems in adults, but less is known about this association in adolescents. We examined whether current urbanicity was associated with mental health problems directly and indirectly via biological stress system functioning. Participants (n = 323) were adolescents from the Dutch general population. Measures included home and laboratory assessments of autonomic nervous system and hypothalamic-pituitary-adrenal axis functioning, neighborhood-level urbanicity and socioeconomic status, and mother- and adolescent self-reported mental health problems. Structural equation models showed that urbanicity was not associated with mental health problems directly. Urbanicity was associated with acute autonomic nervous system and hypothalamic-pituitary-adrenal axis reactivity such that adolescents who lived in more urban areas showed blunted biological stress reactivity. Furthermore, there was some evidence for an indirect effect of urbanicity on mother-reported behavioral problems via acute autonomic nervous system reactivity. Urbanicity was not associated with overall autonomic nervous system and hypothalamic-pituitary-adrenal axis reactivity or basal hypothalamic-pituitary-adrenal axis functioning. Although we observed some evidence for associations between urbanicity, biological stress reactivity and mental health problems, most of the tested associations were not statistically significant. Measures of long-term biological stress system functioning may be more relevant to the study of broader environmental factors such as urbanicity.