Adolescence is a period of intensive development in body, brain, and behavior. Potentiated by changes in hormones and neural response to social stimuli, teenagers undergo a process of social re-orientation away from their caregivers and toward expanding peer networks. The current study examines how relative relational closeness to peers (compared to parents) during adolescence is linked to neural response to the facial emotional expressions of other teenagers. Self-reported closeness with friends (same- and opposite-sex) and parents (mother and father), and neural response to facial stimuli during fMRI, were assessed in 8- to 19-year-old typically developing youth (
n
= 40,
mean
age = 13.90 years old,
SD
= 3.36; 25 female). Youth who reported greater relative closeness with peers than with parents showed decreased activation in the dorsolateral prefrontal cortex (dlPFC) during stimulus presentation, which may reflect lessened inhibitory control or regulatory response to peer-aged faces. Functional connectivity between the dlPFC and dorsal striatum was greatest in older youth who were closer to peers; in contrast, negative coupling between these regions was noted for both younger participants who were closer to peers and older participants who were closer to their parents. In addition, the association between relative closeness to peers and neural activation in regions of the social brain varied by emotion type and age. Results suggest that the re-orientation toward peers that occurs during adolescence is accompanied by changes in neural response to peer-aged social signals in social cognitive, prefrontal, and subcortical networks.