We examine whether neighborhood alcohol outlet density is associated with reduced social capital and whether this relationship is mediated by perceived neighborhood safety. Hierarchical models from a random sample of Los Angeles, CA, and Louisiana residents (N=2,881) from 217 census tracts were utilized. Substantial proportions of the variance in collective efficacy (intraclass correlation coefficient, ICC=16.3%) and organizational participation (ICC=13.8%, median odds ratio=1.99) were attributable to differences between neighborhoods-suggesting that these factors may be influenced by neighborhood-level characteristics. Neighborhood alcohol outlet density was strongly associated with reduced indicators of social capital, and the relationship between collective efficacy and outlet density appears to be mediated by perceived neighborhood safety. Findings support the concept that off-premise alcohol outlets in the neighborhood environment may hinder the development of social capital, possibly through decreased positive social network expansion.