The current study tested between-person hypotheses that global negative affect, friendship intimacy, and close friend drug use predict increased substance use, and the within-person hypothesis that friendship intimacy and close friend substance use moderate the temporal relationship between daily negative affect and subsequent substance use (i.e., self-medication). Experience sampling methodology captured daily variations in mood and substance use, and multilevel modeling techniques were used to parse between- versus within-person effects. Findings supported between-person hypotheses that greater negative affect and lower friendship intimacy predicted greater substance use, and a consistent trend indicated that friendship intimacy and close friend drug use interact to predict substance use overall (though not for self-medication). Risk and protective mechanisms indicate that the effect of friendship intimacy on adolescent use depends on close friend drug use.