AIDS is a serious health threat for many adolescents because they constitute the fastest growing population for new infections. This threat requires that intensive prevention programmes be initiated and maintained. And yet current prevention efforts are narrowly focused and do not: always address the specific contextual needs for adolescents. In the field of adolescent AIDS research, three basic theoretical models have been applied within mainstream psychology: the health belief model (Becker, 1974; Janz & Becker, 1984); the theory of reasoned action (Ajzen & Fishbein, 1970; 1980); and self-efficacy theory (Bandura, 1977). The goal of this paper is to examine the efficacy of applying prospect theory to adolescent AIDS prevention, in an attempt to incorporate some of these situational factors into intervention efforts. This paper will: (1) outline existing health models that have been applied to HIV prevention; (2) describe prospect theory as an alternative decision-making model explaining adolescent risk behaviour; and (3) examine implications of prospect theory for designing intervention and treatment programmes for adolescents.