Introduction Peer workers in the Alcohol and Other Drugs (AOD) sector play a vital role in harm reduction for people who use drugs (PWUDs); however, their experiences are often shaped by complex macro- and micro-risk environments. This study explores these environments and their implications for peer workers, particularly concerning stigma, legal barriers, and organisational culture. Methods Semi-structured interviews were conducted with 18 peers with lived-living experience of illicit drug use. Purposive sampling was employed, leveraging established peer networks and community organisations. Interviews (range = 42–90 mins) were conducted via Microsoft Teams, transcribed, and analysed. The iterative coding process involved deductive codes based on predetermined topics and inductive codes derived from identified themes. Results Participants identified key systemic challenges, including peer stigma, limited career prospects, and the complexities of navigating legal frameworks that criminalise drug use, thereby undermining the efficacy of peer work. The interplay between regulatory frameworks and societal attitudes creates barriers to employment, which disproportionately affects people with drug-related offenses. The significance of collective connection as a source of safety and support was also highlighted, particularly through peer supervision, which fosters enabling environments that promote wellbeing. Discussion Findings highlight the need for advocacy towards legal reform and the creation of inclusive organisational cultures. Recognising and valuing the LLE of peer workers is essential for enhancing harm reduction initiatives and promoting the wellbeing of PWUDs. Addressing these macro- and micro-risk factors, including the importance of peer supervision, can improve peer workers' efficacy in providing meaningful support within their communities.