This chapter summarizes recent literature concerning the connection between peers and substance use (i.e., alcohol use, cigarette use, and illicit drug use) during adolescence and the transition to adulthood. The broad category of peers consists of a wide range of social relationships including best friends, peer groups, and crowds; important aspects include peer activities, relationships, and influence. Young people both select their friends (e.g., based on shared interests) and are influenced, or socialized, by their selected peers. When examining the dynamic periods of life that cover the transitions into, through, and out of adolescence and into the post-high school years, selection and socialization are especially important, given that many transitions involve changes in social contexts and peer relationships. The authors take a developmental perspective by focusing on the developmental transitions that occur during adolescence and the transition to adulthood and how they influence peer relations and substance use.