Feelings of acceptance within school communities can promote positive psychological outcomes. Despite occurring outside of the classroom, youth who engage in extracurricular activities typically report greater school belonging. Accordingly, we examined the longitudinal effect of extracurricular activities on school belonging and depressed mood in a nationally representative, Australian sample of adolescents (N = 3,850, Mage = 12.41) followed for four years. A random-intercept cross-lagged panel model revealed extracurricular activity participation at Time 1 predicted higher school belonging two years later. In turn, higher school belonging reinforced positive mental health outcomes, by predicting within-person decreases in depressed mood. Further, the direct and indirect effect of extracurricular activities were moderated by community-level socioeconomic status. Participants residing in low socioeconomic status communities garnered the greatest benefit from participating in activities, despite having the lowest levels of participation. Our data highlight how structured leisure time pursuits can promote wellbeing, especially within more disadvantaged communities.