Purpose To characterize the association of social class discrimination with the timing of first cigarette use and progression to DSM-IV nicotine dependence (ND) in Black and White youth, examining variation by race, parent vs. youth experiences of discrimination, socioeconomic status (SES), and stage of smoking. Methods Data were drawn from 1461 youth (55.2% Black, 44.8% White; 50.2% female) and mothers in a high-risk family study of alcohol use disorder and related conditions. Cox proportional hazard regression analyses were conducted, using youth’s and mother’s social class discrimination to predict first cigarette use and progression to ND, stratifying by race. Interactions between discrimination and SES indicators (parental education and household income) were tested. Adjusted models included psychiatric covariates. Results In the adjusted first cigarette use models, neither youth’s nor mother’s social class discrimination was a significant predictor among Black youth, but mother’s discrimination was associated with increased risk HR = 1.53 (1.18–1.99) among White youth. In the adjusted ND models, mother’s discrimination was associated with reduced ND risk for Black youth in middle-income families HR = 0.29 (CI 0.13–0.63), but neither youth’s nor mother’s discrimination predicted transition to ND among White youth. Conclusions The observed race and smoking stage-specific effects suggest that social class discrimination is more impactful on early stages of smoking for White youth and later stages for Black youth. The robustness of links with mother’s discrimination experiences further suggests the importance of considering family-level effects and the need to explore possible mechanisms, such as socialization processes.