Considerable evidence supports the hypothesis that peer relationships influence the growth of problem behavior in youth. Developmental research consistently documents the high levels of covariation between peer and youth deviance, even controlling for selection effects. Ironically, the most common public interventions for deviant youth involve segregation from mainstream peers and aggregation into settings with other deviant youth. Developmental research on peer influence suggests that desired positive effects of group interventions in education, mental health, juvenile justice, and community programming may be offset by deviant peer influences in these settings. Given the public health policy issues raised by these findings, there is a need to better understand the conditions under which these peer contagion effects are most pronounced with respect to intervention foci and context, the child's developmental level, and specific strategies for managing youth behavior in groups.