BACKGROUND: To investigate the extent to which three putative 'environmental' risk factors, maternal punitive discipline (MPD), paternal punitive discipline (PPD) and negative life events (NLEs), share genetic influences with, and moderate the heritability of, externalizing behavior. METHOD: The sample consisted of 2647 participants, aged 12-19 years, from the G1219 and G1219Twins longitudinal studies. Externalizing behavior was measured using the Youth Self-Report, MPD, PPD and exposure to NLEs were assessed using the Negative Sanctions Scale and the Life Event Scale for Adolescents respectively. RESULT: Genetic influences overlapped for externalizing behavior and each 'environmental' risk, indicating gene-environment correlation. When controlling for the gene-environment correlation, genetic variance decreased, and both shared and non-shared environmental influences increased, as a function of MPD. Genetic variance increased as a function of PPD, and for NLEs the only interaction effect was on the level of non-shared environment influence unique to externalizing behavior. CONCLUSION: The magnitude of the influence of genetic risk on externalizing behavior is contextually dependent, even after controlling for gene-environment correlation.