This paper reports findings on associations between four subscales of social alienation and psychological distress and sleep problems, and the moderating effects of ethnic pride and shame on these relationships. The study employed a cross-sectional survey design. Participants were 1008 Israeli Palestinian and Jewish adolescents recruited via public schools that allowed access. The questionnaires were administered in adolescents’ native language (Hebrew or Arabic) in their homeroom classes. As hypothesized, findings showed that adolescents who have more trust in procedural justice and prefer their own ethnic group reported fewer sleep problems and that adolescents who were less committed to the law and more alienated reported more sleep problems. The findings also showed negative association between psychological distress and believing in procedural justice and positive association with alienation. However, of sixteen moderating effects tested only ethnic pride reached statistical significance and moderated the effect of alienation on sleep problems. Findings also showed that gender, ethnicity and SES were partially linked to both outcomes variables. Psychological distress and sleep problems were associated with female gender, Palestinian-Israeli ethnic affiliation and low SES. Several possible explanations are offered for the findings. Directions for future research, and potential implications are discussed.