Drawing on transactional theories of child development, we assessed bidirectional links between trajectories of adolescent substance use and parenting processes from early through mid adolescence. Hierarchical generalized models estimated trajectories for 3,317 adolescents from the National Longitudinal Survey of Youth 1997, exploring both between- and within-individual effects. Between individuals, adolescents reporting more regular family activities and greater father and mother knowledge of friends and teachers experienced lower levels of substance use through mid adolescence. Similarly, adolescents with more frequent substance use reported lower family activities, father knowledge, and mother knowledge, though these differences dissipated over time. More conservative within-individual differences indicated a prospective protective effect of family activities, with increases in adolescent participation in family activities predicting later declines in substance use. Results support the central importance of engagement in regular family activities, and suggest the need for further exploration of transactional processes between parents and children in the development of risk behaviors.