Smoking among youth worldwide is a growing public health issue, influenced by factors such as peer pressure and family environment. This leads to various health risks and long-term psychological and physiological repercussions. The present study aims to examine the associations of family environment and peer influence with smoking behavior and well-being of youth. The study was conducted on 392 youth smokers representing different socioeconomic statuses from Eastern Uttar Pradesh, India, by applying a convenient sampling method. The participants ranged from 17 to 30 years, with a mean age of 22.73 (SD 2.85). The study utilized the mental health continuum (short form), smoking urges measure, scale of family environment, and a peer influence measure to assess the variables under study. Analysis revealed peer influence dimensions, i.e., peer conformity and misconduct, were positively associated with smoking behavior and negatively with well-being. In contrast, family cohesion was negatively associated with smoking behavior and positively with well-being, while family conflict showed the opposite pattern. Peer conformity, misconduct, cohesion, and conflict significantly predicted smoking behavior and well-being. The findings highlight the critical links of peer influence and family environments with smoking behavior and well-being, emphasizing the importance of changing negative family environment and peer norms, promoting healthy peer relationships, and reinforcing parental disapproval of smoking to reduce smoking behavior and enhance well-being amongst youth.