OBJECTIVE:Harm-minimization policies suggest that alcohol use is a part of normal adolescent development and that parents should supervise their children's use to encourage responsible drinking. Zero-tolerance policies suggest that all underage alcohol use should be discouraged. This article compared hypotheses derived from harm-minimization and zero-tolerance policies regarding the influence of family context and supervised drinking on adolescent alcohol use and related harms among adolescents in Washington State, USA, and Victoria, Australia, two states that have respectively adopted zero-tolerance and harm-minimization policies. METHOD:Representative samples of seventh-grade students (N = 1,945; 989 females) were recruited from schools in each state. Students completed comprehensive questionnaires on alcohol use, related problem behaviors, and risk and protective factors annually from 2002 to 2004 when they were in ninth grade. RESULTS:Relationships between family context and alcohol use and harmful use were very similar in both states. Adult-supervised settings for alcohol use were associated with higher levels of harmful alcohol consequences. Adult-supervised alcohol use mediated the links between favorable parental attitudes to alcohol use and ninth-grade alcohol use for students in both states. CONCLUSIONS:Despite policy differences in the two states, relationships between family context variables and alcohol use and harmful use are remarkably similar. Adult-supervised settings for alcohol use resulted in higher levels of harmful alcohol consequences, contrary to predictions derived from harm-minimization policy. Findings challenge the harm-minimization position that supervised alcohol use or early-age alcohol use will reduce the development of adolescent alcohol problems.