Several authors consider high and frequent conflicts between friends during childhood as a serious risk for subsequent conduct problems such as generalized physical aggression toward others (e.g., Kupersmidt, Burchinal, & Patterson, 1995; Sebanc, 2003). Although it seems logical to assume that friendship conflict could have some negative consequences on children's behaviors, some scholars have suggested that a certain amount of conflict between friends may actually promote social adjustment (e.g., Laursen & Pursell, 2009). The aim of this study was to investigate the role of friendship conflict in regard to the development of generalized physical aggression toward others in the early school years (i.e., from kindergarten to Grade 1), as well as the moderating role of relational (i.e., shared positive affect and dyadic conflict resolution skills) and personal (i.e., children's sex and genetic liability for aggression) characteristics in this context. The sample included 745 twins assessed through teacher, peer, child, and friend ratings in kindergarten and Grade 1. Friendship conflict in kindergarten was linearly related to an increase in boys' but not girls' generalized physical aggression. However, shared positive affect and conflict resolution skills mitigated the prospective associations between friendship conflict and generalized physical aggression. These results were independent of children's sex, genetic risk for physical aggression, and initial levels of generalized physical aggression in kindergarten. Fostering a positive relationship between friends at school entry may buffer against the risk associated with experiencing friendship conflict.