Epidemiological researchers often examine associations between risk factors and health outcomes in non-experimental designs. Observed associations may be causal or confounded by unmeasured factors. Sibling and co-twin control studies account for familial confounding by comparing exposure levels among siblings (or twins). If the exposure-outcome association is causal, the siblings should also differ regarding the outcome. However, such studies may sometimes introduce more bias than they alleviate. Measurement error in the exposure may bias results and lead to erroneous conclusions that truly causal exposure-outcome associations are confounded by familial factors. The current study used Monte Carlo simulations to examine bias due to measurement error in sibling control models when the observed exposure-outcome association is truly causal. The results showed that decreasing exposure reliability and increasing sibling-correlations in the exposure led to deflated exposure-outcome associations and inflated associations between the family mean of the exposure and the outcome. The risk of falsely concluding that causal associations were confounded was high in many situations. For example, when exposure reliability was 0.7 and the observed sibling-correlation was r = 0.4, about 30-90% of the samples (n = 2,000) provided results supporting a false conclusion of confounding, depending on how p-values were interpreted as evidence for a family effect on the outcome. The current results have practical importance for epidemiological researchers conducting or reviewing sibling and co-twin control studies and may improve our understanding of observed associations between risk factors and health outcomes. We have developed an app (SibSim) providing simulations of many situations not presented in this paper.