The development of substance use during adolescence occurs against a backdrop of considerable changes in the social context, but these simultaneous changes alone are not conclusive evidence of a strong causal link between peers and drug use. Clarifying how peers shape the development of substance use is difficult because researchers often do not distinguish between different peer relationships (e.g., friendships, groups, networks), different social processes within these relationships (e.g., direct peer pressure, normative regulation, modeling), or adolescents’ own social motives and perceptions. The chapter discusses how peer relationships change across adolescence, how social processes within different relationships might contribute to substance use, and the methodological challenges that researchers face when documenting these contributions. The chapter also highlights how studies could better match the complexity of research questions about peer influence with appropriate data collection and analytic strategies.