Abstract: Although smiling and laughter have received considerable attention from researchers, little is known about the way they are displayed in naturally occurring group interactions. This aspect could be crucial if we want to understand the function of affiliative behaviours in social relationships. Naturalistic observations were conducted in areas where people could be watched interacting in small groups. Focal sampling of men and women allowed the recording of smiling and laughter frequencies, as well as group size and composition in terms of age and sex. Overall, smiling and laughter were influenced by group size and age of people involved. Smiling and laughter were also affected by other aspects of social context, depending on the type of behaviour concerned and the sex of individuals. By deriving predictions from three hypotheses - sexual advertisement, social competition, and cooperation - this study revealed that smiling and laughter are likely to be involved in the formation of cooperative relationships.