Numerous contextual factors contribute to risky sexual decision-making among men who have sex with men (MSM), with experimental laboratory-based studies suggesting that alcohol consumption, sexual arousal, and partner familiarity have the potential to impact condom negotiations during sexual encounters. The purpose of the current study was to extend this line of inquiry outside of the laboratory and into the everyday lives of MSM. We collected six weeks of daily data on alcohol consumption and sexual behaviors from 257 moderate- and heavy-drinking MSM to examine the within- and between-subjects effects of alcohol consumption, average daily sexual arousal, and partner familiarity on condom negotiation processes during sexual encounters. We hypothesized that alcohol consumption, higher levels of average daily sexual arousal, and greater partner familiarity would all contribute to a reduced likelihood of condom negotiation prior to sexual activity, and that they would also affect the difficulty of negotiations. Contrary to hypotheses, none of these three predictors had significant within-subjects effects on condom negotiation outcomes. However, partner familiarity and average daily sexual arousal did exert significant between-subjects effects on the incidence of negotiation and negotiation difficulty. These findings have important implications for risk-reduction strategies in this population. They also highlight the challenges of reconciling results from experimental laboratory research and experience sampling conducted outside of the laboratory on sexual risk behavior.