Aims To estimate the magnitude of genetic and environmental influences on timing of first alcohol use and alcohol dependence (AD) and to quantify the overlap in these influences across the two alcohol-related outcomes. Participants The sample consisted of 5382 twins (2691 complete pairs), aged 24–36 years, from the Australian Twin Registry. Measurements History of alcohol use and DSM-IV alcohol dependence were assessed by structured telephone interview. Findings In both sexes, the relationship between age at first alcohol use and risk for AD followed a linear trend, such that the highest rates of AD were observed in individuals who began drinking at an earlier than average age (14 years or younger). Heritability estimates for timing of first alcohol use and AD were 36% and 53%, respectively. Shared environmental factors accounted for 15% of variance in initiation. There was no evidence of shared environmental influences on AD. The genetic correlation between timing of first alcohol use and AD was 0.59. Conclusions Findings highlight the substantial role of genetics in the development of AD and the early manifestation of that genetic risk in the timing of alcohol use initiation which, unlike AD, is also influenced to a modest degree by shared environmental factors. The considerable overlap in heritable influences—and the virtual absence of overlap in individual-specific environmental influences—on initiation of alcohol use and AD indicates that the association between age at first drink and AD is attributable in large part to common genetic sources of variance.