Experiencing stress and exposure to terrorism may have an adverse effect on health risk behaviors. Few studies have examined alcohol use among adults living in Israel under chronic, stressful terrorism-related conditions. In this study, we examined the relationships of demographics, past stressful events, and terrorism exposure to the frequency of alcohol use and the mediating roles of depressive and post-traumatic stress disorder (PTSD) symptoms. We used three waves of data from a 2007-2008 nationally representative sample of Jewish and Palestinian adults in Israel. We assessed past stressful events, in addition to direct and indirect exposures to terrorism. Results indicated that past stressful events and exposure to terrorism were not directly associated with alcohol use, but were indirectly associated and mediated by depressive and PTSD symptomology. Mental health symptoms were differentially associated with alcohol use. More frequent drinking was mediated by higher levels of depression, including for women and Palestinians; however, PTSD symptom severity was related to less frequent drinking. Mental health may play a prominent role in the frequency of alcohol use among adults exposed to terrorism in Israel. Alcohol use, as a coping mechanism, may differ by demographic characteristics (gender and ethnicity) and psychological symptomology for adults living in a conflict zone in Israel.