ABSTRACTBackground  Peer smoking provides a socially reinforcing context of friends' encouragement and approval that contributes to smoking behavior. Twin studies show correlations and interactions between peer substance use and genetic liability for substance use. However, none examined specific genes. Here we test the hypothesis that the nicotinic receptor genes CHRNA5 (rs16969968), CHRNA3 (rs578776), CHRNB3 (rs13277254) and CHRND (rs12466358) modify the risk for nicotine dependence associated with peer smoking.Methods  Cases of current nicotine dependence [Fagerström Test for Nicotine Dependence (FTND) ≥ 4] and smoking‐exposed (smoked 100+ cigarettes life‐time), but non‐dependent controls (life‐time FTND = 0) came from the Collaborative Genetic Study of Nicotine Dependence (n = 2038). Peer smoking was assessed retrospectively for grades 9–12.Results  Peer smoking and the four single nucleotide polymorphisms (SNPs) were associated with nicotine dependence. A statistically significant interaction was found between peer smoking and rs16969968 (P = 0.0077). Overall risk of nicotine dependence was highest for the rs16969968 AA genotype. However, variance in nicotine dependence attributable to peer smoking was substantially lower among those with the AA genotype at rs16969968 than the lower‐risk genotypes: AA = 2.5%, GA/AG = 11.2%, GG = 14.2%; P ≤ 0.004.Conclusions  Peer smoking had a substantially lower effect on nicotine dependence among those with the high‐risk AA genotype at the functional SNP rs16969968 (CHRNA5) than among those with lower‐risk genotypes. Such results highlight the possibility that given drug exposure those with specific genetic risks may be less affected by social contexts and intervention strategies focused upon social factors could have less influence on those at highest genetic risk.