Introduction: Peers are believed to continue as prominent sources of influence for young adults. However, having peers who use alcohol and drugs is associated with depressive symptoms in young adults and research on the effects of having peers who model positive activities beyond adolescence is scarce. Method: In this 10-year study of 644 Canadian youth (52% female), we used multilevel modeling to examine the effects of within-person and between-person differences in the interplay of peer behaviours and changes in depressive symptoms between ages 14 and 25. Data were collected via face-to-face interviews and surveys for private topics. Results: Youth with close friends who used drugs and alcohol consistently reported more depressive symptoms at each age, whereas having friends who engaged in positive activities was associated with fewer depressive symptoms, especially during adolescence. Moreover, at times when youth had more substance-using peers than usual (within person variation), they also reported more symptoms. Conclusions: Substance-using peer contexts convey both short- and long-term risks for depressive symptoms. However, the protective effects of having peers who are engaged in positive activities, while generally protective, may be reduced in young adulthood. It is possible that older youth withdraw from peers and activities as their depression worsens, and prosocial activities become less supervised by parents, more optional, and more expensive.