The main goal of the current study was to use longitudinal data to examine the processes by which genetic risk for externalizing behavior unfolds. We focused on direct genetic effects, as well as the possible role of indirect genetically influenced environmental pathways involving family and peer contexts on influencing adolescent externalizing behavior. We tested whether parental knowledge and peer substance use accounted for, in part, the association of genetic predispositions with adolescent externalizing behavior. We considered parental knowledge and peer substance use mediating pathways simultaneously in order to examine the unique effects of each specific pathway. The present study adds to the literature in understanding the mechanisms through which genetic risk, as operationalized using polygenic scores, unfolds to influence adolescent development and behavior.