Alcohol abuse can influence sexual risk behavior; however, its measurement is not straightforward. This study compared self-reported alcohol use, via the AUDIT and CAGE, with levels of phosphatidylethanol (Peth), a phospholipid biomarker that forms with chronic, heavy drinking, among high-risk MSM and TW in Lima, Peru. Chi square, Fisher's exact, Wilcoxon ranksum tests compared the instruments. Receiver operating curves determined sensitivity and specificity of the self-reported measures. Among 69 MSM and 17 TW, PEth was positive for 86% (95% CI 77-93%) of participants, while 67% reported binge-drinking in the last 2 weeks. The AUDIT classified 25% as hazardous drinkers while CAGE identified 6% as problem drinkers. Self-reported binge drinking was more sensitive than the AUDIT for PEth positivity (71% vs. 27%, p = 0.022). Among high-risk MSM and TW in Lima, validated, self-report measures of alcohol abuse underestimated biological measures. Further research correlating bio-markers and self-reported alcohol abuse measures is needed.