PURPOSE: This systematic review examined the hypothesis that school institutional factors influence young people's use of drugs. We aimed to (1) identify the effect of school-level changes on drug use and (2) explore the possible mechanisms by which school-level influences on individual drug use might occur. METHODS: Systematic review. Experimental/quasi-experimental studies of "whole-school" drug prevention interventions and longitudinal observational studies on the association between school-level and individual-level school-related exposures and drug use were included. Experimental studies were included because they are the most reliable available source of evidence about causation. Observational studies of school-level and individual-level school-related exposures were included with the aim of providing evidence about a wider range of possible school-level effects and how school-level influences might be mediated by individual-level factors. RESULTS: Experimental studies suggested that changes to the school social environment that increase student participation, improve relationships and promote a positive school ethos may be associated with reduced drug use. School-level and individual-level observational studies consistently reported that disengagement and poor teacher-student relationships were associated with drug use and other risky health behaviors. CONCLUSIONS: There is evidence of school effects on young people's drug use. Interventions that promote a positive school ethos and reduce student disaffection may be an effective complement to drug prevention interventions addressing individual knowledge, skills, and peer norms. Such approaches should now be piloted in a wider range of settings. Further research is also needed to explore mechanisms by which schools may influence young people's drug use.