The variant aldehyde dehydrogenase allele, ALDH2*2, consistently has been associated with protection against alcohol dependence, but the mechanism underlying this process is not known. This study examined growth trajectories of alcohol consumption (frequency, average quantity, binge drinking, maximum drinks) and problems over the college years and then tested whether the ALDH2 genotype mediated or moderated the relationship between alcohol consumption and problems. Asian American college students (N = 433) reported on their drinking behavior in their first year of college and then annually for 3 consecutive years. Alcohol consumption and problems increased over the college years for both those with and without ALDH2*2, but having an ALDH2*2 allele was associated with less of an increase in problems over time. A mediation model was supported, with ALDH2*2 group differences in problems fully accounted for by differences in frequency of binge drinking. Findings also supported a moderation hypothesis: All four alcohol consumption variables were significant predictors of subsequent alcohol problems, but these relationships were not as strong in those with ALDH2*2 as in those without ALDH2*2. Our findings suggest that the interplay between ALDH2*2 and drinking-related problems is complex, involving both mediation and moderation processes that reduce the likelihood of developing problems via reduction of heavy drinking as well as by altering the relationship between alcohol consumption and problems. Results of this longitudinal study provide evidence that what seems like a relatively straightforward effect of a diminished ability to metabolize alcohol on drinking behavior is actually dependent on behavior and developmental stage.