<p>Social competence represents a critical developmental asset during adolescence, functioning as both an outcome and predictor of adaptive functioning. This review discusses theory and research on whether&ensp;and how social competence may affect adolescents&#39; development of social skills as well as their psychological functioning. Based on developmental, social learning, and positive youth development theoretical frameworks, we synthesise literature that suggests that social competence is robustly linked to&ensp;peer acceptance, emotional regulation skills, academic success and mental health outcomes. Prior mechanisms are identified for social competence to operate through social information processing,&ensp;interpersonal effectiveness and resilience. Results showed&ensp;that socially competent adolescents have better social skills, higher self-esteem, lower levels of internalising and externalising problems and greater satisfaction with life. Family environment,&ensp;peer networks, and cultural influences are considered moderators of these associations. The implications&ensp;for prevention and intervention programs focusing on adolescent social development are discussed, as well as future research directions.</p>