Objective: Not only are substance-use disorders and externalizing disorders frequently comorbid, they often co-occur in families across generations. The current study examined the role of genetic and environmental influences in the relationship between paternal histories of drug dependence or alcohol dependence and offspring conduct disorder using an offspring-of-twins design. Method: Participants were male twins (n = 1,774) from the Vietnam Era Twin Registry, their offspring (n = 1,917), and mothers of the offspring (n = 1,202). Twins had a history of drug dependence, alcohol dependence, or neither. Based on the father's and his co-twin's drug-dependence or alcohol-dependence history and zygosity, risk groups were constructed to reflect different levels of genetic and environmental risk that were then used to predict offspring conduct disorder. Results: After controlling for potentially confounding variables, the offspring of men with a history of drug dependence or alcohol dependence had significantly higher rates of conduct disorder, compared with offspring of men without this history. Offspring at higher genetic risk had higher rates of conduct disorder. High-risk offspring at lower environmental risk had lower rates of conduct disorder but only in the case of paternal drug-dependence risk. Lower environmental risk did not influence rates of offspring conduct disorder when the father had an alcohol-dependence history. Conclusions: Genetic risk associated with both paternal drug-dependence and paternal alcohol-dependence histories predicted offspring conduct-disorder risk, but only risk associated with paternal drug-dependence history was mitigated by having a low-risk environment. These results demonstrated a significant gene-environment interaction effect.