Research on social determinants of health has highlighted the influence of neighborhood characteristics (e.g., neighborhood safety) on adolescents’ health. However, it is less clear how changes in neighborhood environments play a role in adolescent development, and who are more sensitive to such changes. Utilizing the first three waves of data from the Adolescent Brain Cognitive Development (ABCD) project (N = 7932, M (SD) age = 9.93 (.63) years at T1; 51% boys), the present study found that increases in neighborhood safety were associated with decreased adolescent externalizing symptoms, internalizing symptoms, but not sleep disturbance over time, controlling for baseline neighborhood safety. Further, adolescents’ insula and anterior cingulate cortex (ACC) reactivity to positive emotional stimuli moderated the association between changes in neighborhood safety and adolescent adjustment. Among youth who showed higher, but not lower, insula and ACC reactivity to positive emotion, increases in neighborhood safety were linked with better adjustment. The current study contributes to the differential susceptibility literature by identifying affective neural sensitivity as a marker of youth’s susceptibility to changes in neighborhood environment. The findings highlight the importance of neighborhood safety for youth during the transition to adolescence, particularly for those with heightened affective neural sensitivity.