Past research has highlighted the negative impact of early adverse experiences on childhood social functioning, including friendship selection, and later mental health. The current study explored the long-term effects of early adversity on young adults' close friends' psychological symptoms and the impact of these close friendships on later depressive symptoms. A prospective longitudinal design was used to examine 816 youth from a large community-based sample, who were followed from birth through age 25. Participants' mothers provided contemporaneous information about adversity exposure up to age 5, and participants completed questionnaires about their own depressive symptoms at age 20 and in their early 20s. Youth also nominated a best friend to complete questionnaires about his or her own psychopathology at age 20. Individuals who experienced more early adversity by age 5 had best friends with higher rates of psychopathology at age 20. Moreover, best friends' psychopathology predicted target youth depressive symptoms 2 to 5 years later. Results indicate that early adversity continues to affect social functioning throughout young adulthood and that best friendships marked by elevated psychopathology in turn negatively affect mental health. Findings have implications for clinical interventions designed to prevent the development of depressive symptoms in youth who have been exposed to early adversity.