Cross-sectional research suggests that peer influence has a moderate to strong impact on adolescent risk behavior. Such estimates may be inflated owing to third-variable confounds representing either friendship selection effects or the operation of parallel events. Approximately 1,700 peer dyads in Grades 7 to 11 were studied over a 1-year period to estimate the influence of closest friends on sexual activity and binge drinking. Analyses suggested that peer influence was small but reliable when both selection effects and parallel events were taken into account. Peer influence varied as a function of individual-peer similarity and maternal relations but not in accord with other theoretical predictions. It is suggested that the magnitude of peer effects in previous research may be overestimated in many contexts.