BACKGROUND Peer harassment can have serious implications for students' success and well‐being, and prevention programs need to consider the school context. This study aimed to: (1) identify groups of similar schools based on their risk and protective factors and demographic characteristics and (2) examine associations between school profiles and students' bullying involvement. METHODS Data came from 505 schools and 122,106 students who completed the 2013 Minnesota Student Survey. School‐level risk and protective factors and demographic characteristics were included in a latent profile analysis (LPA) to identify profiles of schools. Multilevel logistic regression was used to assess associations between school profiles and peer harassment. RESULTS Six qualitatively different school profiles were identified. Unadjusted models showed that schools with higher levels of risk had greater odds of peer harassment. However, after controlling for student‐level risk and protection, regardless of school‐level risk, students in metro‐area schools with a more diverse student body reported lower odds of bullying involvement. CONCLUSIONS These findings highlight the importance of the social environment into peer harassment. In addition to addressing student‐level risk and protection, larger community factors and norms also need to be taken into account for developing, selecting, and implementing the most effective approaches to bullying prevention.