ABSTRACT Aims Peer substance involvement (PSI) is a robust correlate of adolescent substance use. A small number of genetically informative studies suggest that shared genetic and environmental factors contribute to this association. We examine mechanisms by which PSI influences the etiology of regular substance involvement (RSI), particularly in women. Design Population-based cohort study of twin women from the US Midwest. Participants 2176 twin women. Measurements To examine the relationship between self-reported PSI during adolescence and a composite RSI representing regular tobacco, alcohol and cannabis use during young adulthood, using genetically informative correlation, moderation and joint correlation-moderation models. Findings There was evidence for a significant additive genetic X environment interaction. PSI was moderately heritable (h2 = 0.25). Genetic, shared and non-shared influences on RSI overlapped with influences on PSI (genetic correlation of 0.43). Even after controlling for these shared genetic influences, RSI was more heritable in those reporting greater PSI. Conclusions While young women may select peers based on certain dispositional traits (e.g. permissiveness towards substance use), the social milieu constructed by PSI does modify the architecture of increased RSI in those individuals with increasing levels of PSI being associated with stronger expression of heritable influences.