Helen Winter told an employment tribunal she had used MDMA, the active ingredient in ecstasy, on "several occasions" and let two young clients stay at her flat.
She is also accused of offering MDMA to one of the young people and taking it in front of them, which she denies.
She could face being struck off.
Ms Winter admitted she was guilty of misconduct and that her fitness to practice is impaired at a hearing at the Health and Care Professions Council (HCPS).
She also admitted testing positive for cocaine in a routine drugs test for Kids Company in 2014.
Kids Company collapsed in August amid claims of financial mismanagement and has faced a series of damaging allegations since then.
The charity, which is now under the control of administrators, is being investigated by officers from the Sexual Offences, Exploitation and Child Abuse team of the Metropolitan Police Service.
Daniel Mansell, the presenting officer, told the HCPS hearing concerns were raised in Kids Company about the registrant's drug use and "inappropriate interaction with service users".
He said Ms Winter went to the Hidden club in Vauxhall, south London, with her colleague Nicci Shall in January 2014 having purchased some MDMA on the way.
Ms Shall told the hearing they were in the toilet when they saw the two young people known as Client C and Client D, both in their early 20s.
It is alleged she offered the drug to Client C, who accepted - which Ms Winter denies.
Ms Shall told the hearing: "Helen Winter offered client C and me a dab of MDMA, which I declined. Helen Winter and client C consumed the MDMA."
She said that after she left the club she felt "awful" about what she had witnessed and wanted to tell her boss, but was persuaded not to with Dr Winter telling her the clients had "had a good time and nothing had come of it".
She told the hearing: "I went to colleagues and they advised me not to take it any further. I stupidly followed their advice and I regret that."
An internal investigation was carried out after she reported the matter to the charity's chief executive, Camilla Batmanghelidjh, but she raised concerns about the accuracy of the subsequent report.
She said: "I do not feel that the investigation report, compiled by witness B, accurately reflects my account of events.
"I challenged the accuracy of the report but was informed by Kids Company that it was an internal document and should remain confidential."

Police said an officer was responding to an emergency call at 19:00 BST when the car collided with a Ford Fiesta and hit a lamp-post on Park Road, Toxteth.
The police officer was taken to hospital with a back injury. The occupants of the Fiesta were assessed by paramedics at the scene.
An investigation into the circumstances of the collision is under way.
Two 14-year-old boys from Aigburth have been arrested on suspicion of attempted robbery in relation to the original 999 call.

Police were called to the two-vehicle accident on the A698 near Denholm at about 16:15 on Thursday.
The female driver of a Vauxhall Zafira died at the scene. Three boys aged 12, nine and 18 months, who were in the car with her, were taken to hospital.
Their injuries are not thought to be life-threatening. The driver of a Peugeot 207 was also taken to hospital.
Police said the 26-year-old man's injuries were also not life-threatening.
Anyone who witnessed the accident has been asked to contact police.

However, not all attendees at the "Oscars of the East Coast" party are strictly adhering to the chosen theme.
The annual gala brings in millions for the museum's Costume Institute.
Last year, A-listers from film, music, sports and fashion were asked to dress to the theme of Chinese influences on western fashion - with varying success.
This year, the exhibit is "Manus x Machina: Fashion in an Age of Technology."
The chairwoman of the invitation-only extravaganza is American Vogue editor Anna Wintour, who has been organising the gala for nearly 20 years.
This year, tickets cost $30,000 (Â£20,456) per person - but despite the prices it is one of the hardest parties to get in to.
Privacy of the guests is intensely guarded, and posting on social media after they have walked the red carpet and entered the event has been banned since last year.
Last year, more than $12m was raised for the museum's Costume Institute.
A psychologist working at Kids Company has admitted taking illegal drugs in the company of young people she met through the charity.
[NEXT_CONCEPT]
A police car flipped on its side as it went to the scene of an attempted robbery last night in Liverpool.
[NEXT_CONCEPT]
A 34-year-old woman has been killed in a crash in the Borders in which three young boys and a man were also injured.
[NEXT_CONCEPT]
Celebrities at New York's Metropolitan Museum of Art have gone metallic as this year's Met Ball celebrates the convergence of man and machine.