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The study used latent growth modeling to investigate longitudinal relationships between individuation, peer alcohol use, and adolescent alcohol use among African American, Mexican American, and non-Hispanic White adolescents (N= 6,048) from 7th, 8th, and 9th grades over a 3-year period. Initial levels of peer alcohol use were significantly related to changes in adolescents' alcohol use, whereas initial adolescent alcohol use also significantly related to changes in peers' alcohol use, suggesting a bidirectional relationship. Higher levels of intergenerational individuation were related to smaller increases in adolescent alcohol use and higher levels of separation were related to larger increases in youth drinking. The findings were similar across ethnic groups. Implications for development of prevention and intervention programs are discussed.