Interpersonal relationships are an important and integral part of numerous social science research agendas. Analytical tools have been created in the last 10 years that model dyadic interactions. In particular, this article focuses on the dyadic models of Fienberg and Wasserman [Fienberg, S.E., Wasserman, S., 1981. Categorical data analysis of single sociometric relations. In: Leinhardt, S. (Ed.), Sociological Methodology. Jossey-Bass, San Francisco.], Holland and Leinhardt [Holland, P.W., Leinhardt, S., 1981. An exponential family of probability densities for directed graphs. Journal of the American Statistical Association 76 (1981) 33-51.], Iacobucci and Wasserman [Iacobucci, D., Wasserman, S., 1988. A general framework for the statistical analysis of sequential dyadic interaction data. Psychological Bulletin 103 (1988) 379-390.] and Wasserman and Iacobucci [Wasserman, S., Iacobucci, D., 1986. Statistical analysis of discrete relational data. British Journal of Mathematical and Statistical Psychology 39 (1986) 41-64.]. However, measurement issues like reliability and validity, as discussed by Allen and Yen [Allen, M.J., Yen, W.M., 1979. Introduction to Measurement Theory. Brooks/Cole, Monterey, CA, 1979.], Nunnally [Nunnally, J., 1978. Psychometric Theory, 2nd edn. McGraw-Hill, New York, NY, 1978.] and Uebersax [Uebersax, J.S., 1988. Validity inferences from interobserver agreement. Psychological Bulletin 104 (1988) 405-416.], have not been considered in conjunction with these models, and little is known about the empirical performance of the dyadic models under sub-optimal measurement quality conditions. We offer two essential approaches to ascertaining the level of measurement error in the observed indicators of social ties and relationships. The first approach combines latent class and social network models in one integrated framework and allows for the simultaneous study of measurement and dyadic structural issues. The second approach is an alternative that may be more useful to social science researchers, both because the method is more accessible and because researchers could apply the techniques to data they have already partially analyzed. This approach is a two-staged procedure whereby in the first stage, a probability model based on latent class analysis is estimated which provides an indication of the measurement quality in the data. In the second stage, traditional social network models are estimated. To investigate the implications of different levels of measurement error for interpreting the nature of the network ties and the dyadic parametric performance, we also designed a Monte Carlo experiment. Measurement error is simulated as the likelihood of a binary relational choice (for simplicity) being inaccurately classified, where incorrect diagnoses can result from poor interitem agreement (i.e., unreliability) or poor interrater agreement. The simulation can be used by researchers in combination with the two-stage approach. The results of the simulation provide guidelines for situations when social network models can withstand a reasonable degree of sub-optimal measurement quality and highlight adverse conditions which can significantly affect the performance of the modeling approach. Further, the simulation shows that sample size assists in reducing the chances of making Type II errors, but it does not compensate for biases in parameter estimates in the presence of increasing error. Finally, the measurement and dyadic analytical methods are applied to a real dataset describing interorganizational relational activity using multiple raters. Recommendations are offered to guide the researcher in making decisions about research design when using dyadic models