Concerning the role of parental smoking on development of adolescent smoking, most studies have exclusively focused on the direct effects of parents' smoking on youths' smoking. However, parental smoking may also play an indirect role by affecting youths' susceptibility to peer influences and by affecting friendship selection. Data were from a three-wave short-term longitudinal study of 1595 adolescents. Findings showed high similarities in smoking between reciprocal friends. Additionally, friend's smoking and parents' smoking were moderately related to adolescent smoking onset, but parents' smoking did not moderate the prospective association between best friend's smoking and adolescent smoking. Finally, parental smoking seemed to affect the selection of new friends: In particular, adolescents with smoking parents were most likely to become affiliated with smoking friends. There was no evidence that parental smoking affected termination of friendships.