This study uses a three‐wave longitudinal study of young Australians to identify developmental processes underlying the relationship between school bullying and physical aggression in early adulthood. The central question is whether and how drinking and participation in work or university study disrupt or entrench aggressive pathways from school bullying to adult aggression. Self‐report data were collected from 88 females and 63 males (N = 151) during childhood (age 10), adolescence (age 14), and early adulthood (age 20). Participants who bullied other students during childhood and adolescence, or during adolescence only, reported more physical aggression during early adulthood than those who never bullied. However, those who had bullied during adolescence only reported significantly higher adult aggression if they were also drinking at above‐average frequencies. Conversely, participation in university, compared to being in the workforce, was associated with significantly less adult aggression among the at‐risk groups. Findings suggest that particular contexts during early adulthood can offer youth on aggressive trajectories (as evidenced by bullying at school) unique opportunities to turn their behaviour around. Other contexts, however, may exacerbate aggressive behaviour patterns.