BACKGROUND Transgender adolescents face tremendous social stress in families and schools, which often leads to behavioral health disparities. This study assessed whether rates of substance use were higher among transgender adolescents when compared to nontransgender adolescents. METHODS This study is a secondary data analysis of the 2013‐2015 California Healthy Kids Survey (CHKS) that examines whether rates of substance use are higher among transgender youth when compared to nontransgender youth. Participants included 4778 transgender and 630,200 nontransgender students in middle and high schools in nearly all school districts in California. The study outcomes were lifetime, recent, and in‐school use of cigarettes, tobacco, alcohol, marijuana, cocaine, and ecstasy as well as nonmedical use of prescription painkillers, diet pills, Ritalin or Adderall, and cold medicine. RESULTS Transgender students were about 2‐1/2 times more likely as nontransgender students to use cocaine/methamphetamine in their lifetime (odds ratio [OR] = 2.53; 95% confidence interval [CI] = 2.18‐2.95) and about 2.8 times as likely to report past 30‐day inhalant use (OR = 2.80; 95% CI = 2.41‐3.26). Transgender students were more than twice as likely to report past 30‐day prescription pain medication use (OR = 2.19; 95% CI = 1.90‐2.53) and more than 3 times as likely to use cigarettes in school (OR = 3.37; 95% CI = 2.84‐3.99). CONCLUSIONS The study's findings indicate a need for community‐ and school‐based interventions that reduce substance use among transgender youth.