Previous research has shown that people are good at judging others’ happiness. Judgments of others’ happiness are significantly associated with the person’s self-reported happiness. Little is known, however, about how people form such impressions about others’ happiness. In the present study, we examined what kinds of cues people use to judge their close friends’ happiness. We recruited 67 groups of four friends each (i.e., 268 participants) at UVa. Groups of participants came to the lab and rated themselves and their three friends on life satisfaction as a whole. As cue measures, they rated themselves and their friends on satisfaction with 13 important life domains for college students (e.g., academic achievement, social relationships, health). We created friends’ perception of life satisfaction and life domain satisfaction for each participant by averaging the three friends’ ratings. We found that friends’ reports of life satisfaction were significantly correlated with self-reports of life satisfaction (r = .44), meaning that these two perspectives moderately agreed. We also found that friends’ reports of life satisfaction were significantly correlated with all 13 life domain cues, suggesting that participants used all 13 domains to evaluate their friends’ life satisfaction. More importantly, we found that of the 13 cues, 4 cues (school life, recreation/leisure, health, and relationship with family) contributed most to the accurate perception of a friend’s happiness. This study may shed light on underlying mechanisms through which people evaluate close friends’ happiness. The findings may guide people to use valid cues to judge others’ happiness accurately.