Background: Adolescent tobacco use is a major public health problem. However, there is little information about the impact of tobacco advertising and availability near schools on adolescent tobacco use in India. Methods: The various tobacco products and brands available in outlets within 100 meters of two high schools in an Indian town were identified. A stratified random sample of 172 participants from these two schools completed a questionnaire on tobacco use and socioeconomic status. Results: Eighteen outlets selling tobacco products were identified. In the two schools the current use of smoked and smokeless tobacco was 9.1% and 17.4% respectively. School location and low socio-economic status of adolescents were associated with tobacco awareness of advertisements (p=0.001) and the receipt of a free sample (p= 0.032). Advertisements on billboards, posters and the receipt of a free tobacco sample were significant factors (p=0.031, p=0.016, p=0.017 respectively) in current tobacco use. Conclusion: In this study a significant proportion of adolescents used tobacco. Tobacco-promotion activities (advertising, the receipt of a free sample), school location and economic status were found to be associated with adolescent tobacco initiation. The local environment should be included in the prevention of adolescent tobacco initiation.