Although evidence of the strong correlation between deviant behavior and exposure to deviant peers is overwhelming, researchers have yet to investigate whether a nonlinear functional form better captures this relationship than does a linear form. Researchers also have yet to examine the extent to which peer effects vary as a function of the neighborhood context. To address these issues, the authors use data from the Project on Human Development in Chicago Neighborhoods (PHDCN) to examine 1) the functional form of the relationship between peer violence exposure and self-reported violent crime and 2) the extent to which the effect of exposure to violent peers on violence is ecologically structured. Estimates from logistic hierarchical models indicate that the effect of peer violence exposure on violent crime decreases at higher values of peer violence, as reflected in a nonlinear relationship (expressed in terms of log-odds). Furthermore, exposure to violent peers increases along with neighborhood disadvantage, and the effect of peer violence exposure on violent crime is attenuated as neighborhood disadvantage increases, which is reflected in a cross-level peer violence/disadvantage interaction. (Published Abstract)