Verbal aggression victimization, such as homophobic name‐calling, has been linked to heavier substance use among young people, but little longitudinal research has examined how different types of victimization may affect substance use or whether certain psychosocial factors moderate these risks. In a diverse cohort (N = 2,663), latent transition analysis was used to model heterogeneity in victimization (age 19) and substance use (age 20). Four victimization (high victimization, homophobic name‐calling only, verbal sexual harassment only, and low victimization) and three substance use (poly‐substance use, alcohol, and cannabis only, low all) classes were identified. The high victimization and homophobic name‐calling only classes had the highest probabilities of transitioning into the poly‐substance use class, and the high victimization class had the highest probability of transitioning into the alcohol and cannabis only class. The probability of transitioning into the low all substance use class was highest in the low victimization class and lowest in the high victimization class. For the high victimization class, greater depressive symptoms increased the odds, and better peer relationship quality decreased the odds, of transitioning into the poly‐substance use and alcohol and cannabis only classes. For the homophobic name‐calling only class, greater depressive symptoms increased the odds of transitioning into the poly‐substance use class. Homophobic name‐calling, alone or in combination with verbal sexual harassment, is a risk factor for escalating substance use in young adulthood, especially among victims with depressive symptoms.