Objective: Disagreement exists over whether permissive minimum legal drinking age (MLDA) laws affected underage adolescents (e.g., those age 17 years with the MLDA of 18). We used MLDA changes during the 1970s and 1980s as a natural experiment to investigate how underage exposure to permissive MLDA affected high school dropout. Method: MLDA exposure was added to two data sets: (a) the 5% public use microdata samples of the 1990 and 2000 censuses (n = 3,671,075), and (b) a combined data set based on the 1991–1992 National Longitudinal Alcohol Epidemiological Survey (NLAES) and the 2001–2002 National Epidemiological Survey on Alcohol and Related Conditions (NESARC; n = 16,331). We used logistic regression to model different thresholds of MLDA on high school dropout. We also estimated models conditioned on demographic variables and familial risk of developing alcohol problems. Results: Only the MLDA of 18 predicted high school dropout. Exposure was associated with 4% and 13% higher odds of high school dropout for the census and NLAES/NESARC samples, respectively. We noted greater impact on women (5%–18%), Blacks (5%–19%), and Hispanics (6%). Self-report of parental alcohol problems was associated with 40% higher odds, which equals a 4.14-point increase in dropout rate for that population. Conclusions: The MLDA of 18 likely had a large impact on high school dropout rates, suggesting that the presence of legal-aged peers in a high school setting increased access to alcohol for younger students. Our results also suggest that policy can promote less dangerous drinking behavior even when familial risk of alcohol use disorders is high.