Guided by narrative engagement theory and social cognitive theory, the present study investigates effects of narrative persuasion and peer communication on Nicaraguan adolescent substance use. Eighth-grade students in Nicaragua were recruited to participate in the culturally grounded, school-based prevention intervention Dale se REAL and to watch five entertainment-education intervention videos that teach drug refusal communication strategies. Using the cross-sectional survey (N = 224), a path analysis was run to examine the mediated moderation effects of narrative engagement (e.g., interest, realism, and identification with main characters) and peer communication about the intervention videos (e.g., frequency and valence of communication) on adolescent refusal self-efficacy and substance use behaviors. Results revealed that realism was significantly related to adolescent refusal self-efficacy and frequent peer communication moderated the association between refusal self-efficacy and the past 30-day marijuana use. Findings suggest that health communication scholars should take into consideration social factors and cultural contexts for adolescent substance use prevention research.