Social networks theory suggests obesity is “contagious” within peer groups in that known friends highly influence weight. On the other hand, an alternative model suggests that observable weight distributions affect perception of one's own obesity level. We examine whether the BMI levels of the most obese classmates in the individual student's grade by gender is positively associated with “under‐assessment” of obesity and overweight (i.e., independently measured obesity or overweight, but subjective self‐assessment of normal weight). The data are the 2004–2005 School Physical Activity and Nutrition III (SPAN), a stratified, multistage probability sample of 4th, 8th, and 11th grade public school children in Texas. We used logistic regression to test whether the gender‐specific 85th percentile BMI level within the individual student's grade at their school is positively associated with “under‐assessment” of obesity and overweight. The results show that students are much more likely to under‐assess their own weight if the gender‐specific 85th percentile BMI level is higher in their grade at their school. These data suggest that observable weight distributions play a key role in the obesity epidemic.