Posttraumatic stress disorder (PTSD) and alcohol abuse both are negatively associated with health, and alcohol misuse may mediate the relationship between PTSD and functional health outcomes. The present study tested for such mediation using self-report measures of PTSD symptoms, hazardous alcohol use, and health functioning in 151 U.S. veterans (136 men and 15 women) of the wars in Iraq and Afghanistan recruited from a Veterans Affairs primary care clinic. Based on established cut scores, 39.1% screened positive for PTSD and 26.5% screened positive for hazardous drinking. PTSD symptoms and hazardous drinking were significantly correlated with each other and with health functioning. Hazardous drinking was found to partially mediate the relationship between PTSD and functional mental health, but not physical health.