Guided by a transactional model, we examined the predictors and effects of exposure to externalizing peers in a low-risk sample of preschoolers and kindergarteners. On the basis of daily observations of peer interactions, we calculated measures of total exposure to externalizing peers and measures of exposure to same- and other-sex externalizing peers. Analyses of predictors of externalizing peer exposure supported a homophily hypothesis for girls. Tests of peer contagion effects varied by sex, and exposure to externalizing peers predicted multiple problem behaviors for girls but not for boys. Sex differences were a function of children's own sex, but not of peers' sex. The study provides evidence of externalizing peer exposure effects in a low-risk sample of young children, notably for girls.KEY WORDS: peer exposure; externalizing behavior; sex differences; early childhood.