IMPORTANCE Peer deviance (PD) strongly predicts externalizing psychopathologic conditions but has not been previously assessable in population cohorts. We sought to develop such an index of PD and to clarify its effects on risk of drug abuse (DA). OBJECTIVES To examine how strongly PD increases the risk of DA and whether this community-level liability indicator interacts with key DA risk factors at the individual and family levels. DESIGN, SETTING, AND PARTICIPANTS Studies of future DA registration in 1 401 698 Swedish probands born from January 1, 1970, through December 31, 1985, and their adolescent peers in approximately 9200 small community areas. MAIN OUTCOMES AND MEASURES Drug abuse recorded in medical, legal, or pharmacy registry records. RESULTS Peer deviance was defined as the proportion of individuals born within 5 years of the proband living in the same small community when the proband was 15 years old who eventually were registered for DA. Peer deviance strongly predicted future DA in the proband, with rates of DA in older and male peers more strongly predictive than in younger or female peers. The predictive power of PD was only slightly attenuated by adding measures of community deprivation, collective efficacy, or family socioeconomic status. Probands whose parents were divorced were more sensitive to the pathogenic effects of high PD environments. A robust positive interaction was also seen between genetic risk of DA (indexed by rates of DA in first-, second-, and third-degree relatives) and PD exposure. CONCLUSIONS AND RELEVANCE With sufficient data, PD can be measured in populations and strongly predicts DA. In a nationwide sample, risk factors at the level of the individual (genetic vulnerability), family (parental loss), and community (PD) contribute substantially to risk of DA. Individuals at elevated DA risk because of parental divorce or high genetic liability are more sensitive to the pathogenic effects of PD. Although the effect of our PD measure on DA liability cannot be explained by standard measures of community or family risk, we cannot, with available data, discriminate definitively between the effect of true peer effects and other unmeasured risk factors.