OBJECTIVE: To investigate the prospective influence of individual adolescents' sensation seeking tendency and the sensation seeking tendency of named peers on the use of alcohol and marijuana, controlling for a variety of interpersonal and attitudinal risk and protective factors. METHOD: Data were collected from a cohort of adolescents (N = 428; 60% female) at three points in time, starting in the eighth grade. Respondents provided information about sensation seeking, the positivity of family relations, attitudes toward alcohol and drug use, perceptions of their friends' use of alcohol and marijuana, perceptions of influence by their friends to use alcohol and marijuana, and their own use of alcohol and marijuana. In addition, they named up to three peers, whose sensation seeking and use data were integrated with respondents' data to allow for tests of hypotheses about peer clustering and substance use. RESULTS: Structural equation modeling analyses revealed direct effects of peers' sensation seeking on adolescents' own use of both marijuana and alcohol 2 years later. An unexpected finding was that the individual's own sensation seeking had indirect (not direct) effects on drug use 2 years later. CONCLUSIONS: These findings indicate the potential importance of sensation seeking as a characteristic on which adolescent peers cluster. Furthermore, the findings indicate that, beyond the influence of a variety of other risk factors, peer sensation seeking contributes to adolescents' substance use.