Accumulating research on the differential susceptibility hypothesis supports that the same children who are most affected by maladaptive environments, such as negative parenting or peer relationships, may also benefit most from supportive environments, such as positive parenting and peer relationships. Certain endogenous, biological susceptibility factors such as genes, and cognitive and physiological endophenotypes (e.g. heart rate variability and skin conductance) may underlie this “for better and for worse” phenomenon. The goal of the present dissertation was to investigate which biologically informed susceptibility factors, such as dopaminergic genetic variants and physiological and cognitive endophenotypes, may interact with the parent and peer environment in children’s and adolescents’ development of externalizing and prosocial behavior. To answer these questions, three empirical studies (Chapters 2, 3, and 5) and one review (Chapter 4) were conducted. Overall, the studies indicate that dopaminergic genetic variants but also endophenotypes such as sensory processing sensitivity and attentional bias may modulate children’s susceptibility to the parent and peer environment in their development of externalizing and prosocial behavior. However, finding children that are susceptible to both negative and positive parent and peer environments seems to be challenging. Whether and to what extent such a differential susceptibility effect may be found may be related to several factors, such as study conditions and design, and the type of susceptibility factor examined, calling for more research. Overall, the present dissertation gives several specific suggestions for the future investigation of children’s genetic and biologically informed susceptibility to parenting and the peer environment.