The current study examined the effect of empathy on friendship quality in the context of dyadic same-sex friendships, and how such an effect might be mediated by interpersonal competence. A special version of the actor-partner interdependence model (APIM) was used to examine this hypothesis in 146 same-sex friend dyads in 10th grade. Results showed that empathy was positively related to intimacy and conflict management competences. Also, adolescents higher in intimacy and conflict management competences had more friendship closeness and less discord, respectively, as perceived by both members. Consistent with our hypothesis, the relationship between empathy and self- and friend-reports of friendship closeness and discord were mediated by adolescents' intimacy and conflict management competence, respectively. These findings emphasize the importance of empathy and interpersonal competence in adolescent friendships, and of considering the interdependence of these constructs in friend dyads. (Contains 3 figures and 2 tables.)