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School suspension is a common form of punishment in United States schools. Several studies suggest it increases youth risk of criminal justice contact, but findings regarding its effects on actual behavior, including delinquency or substance use, are less conclusive. Labeling theory suggests suspension should increase delinquent behavior if it triggers exclusion from school activities and interactions, the internalization of a delinquent label, and greater involvement with delinquent peers. I test these ideas using a longitudinal peer network approach. My findings provide partial support for labeling theory. The association between suspension and subsequent delinquency appears due to selection, but a within-individual association with subsequent substance use is robust to many controls, a one-year suspension lag, and multiple sensitivity checks. Furthermore, this association is partially mediated by friends’ self-reported substance use and changes in respondent attitudes toward substance use. Interpersonal and institutional exclusion explain less of the association. My findings inform previous work by suggesting some but not all delinquent behaviors increase following suspension and that mechanisms implied in labeling theory—especially changes in peer networks—play an important role in this process.