People affected by substance use disorders often experience sub‐optimal employment outcomes. The role of drug use in processes that produce and entrench labour market precarity among people who inject drugs (PWID) have not, however, been fully described. We recruited 22 PWID from ongoing prospective cohort studies in Vancouver, Canada, with whom we conducted semi‐structured retrospective interviews and then employed a thematic analysis that drew on concepts from life course theory to explore the mechanisms and pathways linking drug use and labour market trajectories. The participants' narratives identified processes corresponding to causation, whereby suboptimal employment outcomes led to harmful drug use; direct selection, where impairment, health complications or drug‐seeking activities selected individuals out of employment; and indirect selection, where external factors, such as catastrophic events, marked the initiation or intensification of substance use concurrent with sudden changes in capacities for employment. Catastrophic events linking negative transitions in both drug use and labour market trajectories were of primary importance, demarcating critical initiation and transitional events in individual risk trajectories. These results challenge conventional assumptions about the primacy of drug use in determining employment outcomes among PWID and suggest the importance of multidimensional support to mitigate the initiation, accumulation and entrenchment of labour market and drug‐related disadvantage.