Proximal personal and environmental factors typically predict outcomes of treatment for alcohol or drug dependence (AODD), but longitudinal treatment studies have rarely examined these factors in adults with co-occurring psychiatric disorders. In adults with AODD and major depression, the aims of this study were to: (a) disaggregate person-and time-level components of network substance use and self-efficacy, (b) examine their prospective effects on posttreatment alcohol/drug use, and (c) examine whether residential environment moderated relations between these proximal factors and substance use outcomes. Veterans (N = 201) enrolled in a trial of group psychotherapy for AODD and independent MDD completed assessments every 3 months during 1 year of posttreatment follow-up. Outcome variables were percent days drinking (PDD) and using drugs (PDDRG). Proximal variables included abstinence self-efficacy and social network drinking and drug use. Self-efficacy and network substance use at the person-level prospectively predicted PDD (ps < .05) and PDDRG (ps < .05). Within-person, time-level effects of social networks predicted future PDD (ps < .05) but not PDDRG. Controlled environments moderated person-level social network effects (ps < .05), such that greater time in controlled settings attenuated the association between a heavier drinking/using network and posttreatment drinking and drug use. Both individual differences and time-specific fluctuations in proximal targets of psychosocial interventions are related to posttreatment substance use in adults with co-occurring AODD and MDD. More structured environmental settings appear to alleviate risk associated with social network substance use, and may be especially advised for those who have greater difficulty altering social networks during outpatient treatment.