Peer assisted learning (PAL) is a common feature of medical education. Understanding of PAL has been based on processes and outcomes in controlled settings, such as clinical skills labs. PAL in the clinical setting, a complex learning environment, requires fresh evaluation. Socio-cultural theory is proposed as a means to understand educational interventions in ways that are practical and meaningful. We describe the evaluation of a PAL intervention, introduced to support students' transition into full time clinical attachments, using activity theory and activity systems analysis (ASA). Our research question was "How does PAL transfer to the clinical environment?" Junior students on their first clinical attachments undertook a weekly same-level, reciprocal PAL activity. Qualitative data was collected after each session, and focus groups (n = 3) were held on completion. Data was analysed using ASA. ASA revealed two competing activity systems on clinical attachment; Learning from Experts, which students saw as the primary function of the attachment and Learning with Peers, the PAL intervention. The latter took time from the first and was in tension with it. Tensions arose from student beliefs about how learning takes place in clinical settings, and the importance of social relationships, leading to variable engagement with PAL. Differing perspectives within the group were opportunities for expansive learning. PAL in the clinical environment presents challenges specific to that context. Using ASA helped to describe student activity on clinical attachment and to highlight tensions and contradictions relating PAL in that setting. Planning learning opportunities on clinical placements, must take account of how students learn in workplaces, and the complexity of the multiple competing activity systems related to learning and social activities.