My PhD thesis examined the effect of peer influence on the development of adolescent alcohol use. Peer influence is one of the most salient and consistent predictors for drinking behaviour among young people. It is important to understand the relative contribution of the processes of peer influence (whereby adolescents transition to alcohol use in the presence of alcohol-using peers) and peer selection (whereby those using alcohol initially in the absence of alcohol-using friends then subsequently seek out drinking peers) so that appropriate prevention strategies can be applied at different stages in adolescence. Using cross-national, prospective data from state-representative samples of students in Grades 5, 7 and 9 in Victoria, Australia and Washington State, USA from the International Youth DevelopmentStudy, I used Latent Transition Analysis to identify a range of transition groups with adolescents moving in and out of their latent peer classes over time and explored predictors associated with these transitions. The findings provide the firmest estimates to date of the prevalence of peer influenced alcohol use transitions and demonstrate age and country variations.