Adolescents who overestimate the prevalence of smoking among their peers or other teens are at higher risk to take up smoking. The purpose of this study is to elucidate the factors which are related to adolescents’ overestimation of smoking. We surveyed form four (16 years old) students in Petaling District, Selangor. A sample was selected using two-stage stratified sampling, and data were collected using standardised, self-administered questionnaires. A response rate of 80.4% (n=1045/1298) was obtained, and a total of 943 students were included in the final analysis. About 73 percent (n=688/943) of the respondents overestimated the prevalence of smoking among their peers. The odds of overestimating increased as the number of close friends who smoke increased [Two close friends, OR=3.10(1.67-5.75), three close friends OR=10.81(4.44-26.3) and four-five close friends OR= 12.91(5.31-31.43)]. Those who had an elder brother who smoked (OR=1.95 (1.18-3.24)) and females [2.08(1.37-3.33) were more likely to overestimate peer smoking prevalence. Intervention programmes to correct the misperception of peer smoking prevalence are recommended, in addition to measures to modify the other factors that are amenable to intervention, so as to reduce the risk of smoking initiation among adolescents.