In Karnataka state, South India, we analyzed the role of membership in peer groups in reducing HIV-related risk and vulnerability among female sex workers (FSWs). Data from three surveys conducted in Karnataka, a behavioral tracking survey and two rounds of integrated biological and behavioral assessments (IBBAs), were analyzed. Using propensity score matching, we examined the impact of group membership on selected outcomes, including condom use, experience of violence, access to entitlements, and the prevalence of sexually transmitted infections, including HIV infection. Focus group discussions were conducted with the FSWs to better understand their perceptions regarding membership in peer groups. Peer group members participating in the IBBAs had a lower prevalence of gonorrhea and/or chlamydia (5.2 vs 9.6%, p<0.001), and of syphilis (8.2 vs 10.3%, p<0.05), compared to non-members. The average treatment effect for selected outcome measures, from the propensity score matching, showed that FSWs who were members of any peer group reported significantly less experience of violence in the past six months, were less likely to have bribed police to avoid trouble in the past six months, and were more likely to have obtained at least one formal identification document in the past five years, compared to non-members. In focus group discussions, group members indicated that they had more confidence in dealing with situations of forced sex and violence. Including community mobilization and peer group formation in the context of HIV prevention programing can reduce HIV-related risk and vulnerability among FSWs.