This study examined cross-lagged associations between positive teacher and peer relations and academic skill development. Reading and math skills were tested among 625 students in kindergarten and Grade 4. Teacher reports of positive affect toward each student and classmate reports of peer acceptance were gathered in Grades 1-3. The results showed, first, that positive teacher affect toward the student and peer acceptance were reciprocally associated: Positive teacher affect predicted higher peer acceptance, and higher peer acceptance predicted a higher level of positive teacher affect. Second, the effect of positive teacher affect on academic skill development was partly mediated via peer acceptance, while the effect of early academic skills on peer acceptance was partly mediated via positive teacher affect. The results suggest that a warm and supportive teacher can increase a student's peer acceptance, which, in turn, is positively associated with learning outcomes.