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Aims: The current study assesses the impact of youth drug treatment on substance use, offending and wellbeing in a sample of young people recruited from specialist youth alcohol and drug treatment. The paper examines the impact of treatment engagement on the size and substance use profile of the young person's social network and hypothesises that the best treatment outcomes are associated with maintaining the size of the young person's social network but changing its composition to reduce the representation of substance use in social networks. Methods: A cohort study of 112 young people (aged 16–21) engaged in specialist youth alcohol and drug treatment services in Victoria, Australia, were recruited at the beginning of treatment and re-interviewed six months later using a structured questionnaire. Findings: There were improvements in substance use, social functioning, mental health and life satisfaction from baseline to follow-up. While network size was associated with mental health and quality of life markers, only having a lower proportion of substance users in the social network was associated with lower substance use and offending at follow-up. Conclusions: Social networks are a key component of wellbeing in adolescence. This study suggests that through independent analysis of network size and network composition, both the size and the composition of social networks have an important role to play in developing interventions for adolescent substance users that will sustain behaviour changes achieved in specialist treatment. [ABSTRACT FROM AUTHOR]