The goal of this study was to determine whether peer social competence (SC), defined as the capacity to use behavioral, cognitive, and emotional resources in the service of achieving personal goals within preschool peer groups, was related to the type of affiliative subgroups to which children belonged. Two hundred forty Portuguese preschool children (152 seen in consecutive years of data collection) from middle-class families participated. Affiliative subgroup type was assessed from observed proximity data. Social competence was assessed using observational and sociometric measures. Children in more cohesive affiliative subgroups had higher levels of SC, whereas ungrouped children had the lowest SC scores. Follow-up analyses indicated that 2 of the measured SC domains (social engagement/motivation, profiles of behavior/personality attributes) were responsible for the overall difference in SC. Further, membership in a more cohesive subgroup in 1 year contributed to increases in scores for 2 of 3 SC domains (i.e., profiles of behavior/personality attributes and peer acceptance) in the following year. Results suggest that affiliative subgroups both reflect and support individual differences in peer SC during early childhood.