The developmental need to fit in may lead to higher alcohol and other drug use among socially anxious youths which exacerbates the drink/trouble cycle. In treatment, youths with social anxiety disorder (SAD) may avoid participating in therapeutic activities with risk of negative peer appraisal. Peer-helping is a low-intensity, social activity in the 12-step program associated with greater abstinence among treatment-seeking adults. This study examined the influence of SAD on clinical severity at intake, peer-helping during treatment, and outcomes in a large sample of adolescents court-referred to residential treatment. Adolescents (N = 195; 52% female, 30% Black) aged 14 to 18 were prospectively assessed at treatment admission, treatment discharge, and 6 months after treatment discharge. Data were collected using rater-administered assessments, youth reports, clinician reports, medical charts, and electronic court records. The influence of SAD on peer-helping and outcomes was examined using hierarchical linear regression and event history methods. Forty-two percent of youths reported a persistent fear of being humiliated or scrutinized in social situations, and 15% met current diagnostic criteria for SAD. SAD onset preceded initial use for two-thirds of youths with SAD and substance dependency. SAD youths presented for treatment with greater clinical severity in terms of earlier age of first use (p < 0.01), greater lifetime use of heroin and polysubstance use (p < 0.05), incarceration history (p < 0.01), and lifetime trauma (p < 0.001). Twelve-step participation patterns during treatment did not differ between youths with and without SAD except for peer-helping, which was associated with reduced risk of relapse (p < 0.01) and incarceration (p < 0.05) in the 6 months posttreatment. This study found evidence of an association between SAD and earlier age of first use, greater lifetime use of heroin, incarceration history, and lifetime trauma. SAD was associated with higher service participation during treatment, which was associated with reduced risk of relapse and incarceration in the 6 months posttreatment. Findings indicate the benefits of service participation for juveniles with SAD which provides a nonjudgmental, task-focused venue for developing sober networks in the transition back into the community.