While much is known about adolescent cigarette use and initiation in community samples, less is known about these factors among adolescents in clinic-referred populations or those with severe psychopathology. Data were collected from 106 adolescents aged 12 to 15 years (M = 13.6; SD = .74) recruited from a psychiatric inpatient facility. Hierarchical logistic regressions assessed the relationship between psychological, peer, and family environment factors and smoking at baseline and 18 months post-hospitalization. Conduct problem symptoms, friends’ cigarette use, and friends’ marijuana use were associated with greater odds of lifetime and current smoking at baseline, but not at follow-up. After accounting for the significant effect of baseline use, greater family conflict predicted decreased odds of having initiated smoking at the 18 month follow-up. The period following inpatient psychiatric hospitalization may represent an important window for smoking cessation and prevention efforts targeting peer and family factors, especially for youth with externalizing problems.