This study investigated factors that affect the development of positive peer relationships among deaf children with cochlear implants. Ten 5- to 6-year-old deaf children with implants were observed under conditions varying peer context difficulty in a Peer Entry task. Results revealed better outcomes for deaf children interacting in one-on-one situations compared to interactions including two other hearing children and better performance among girls than boys. In addition, longer duration of implant use and higher self-esteem were associated with better performance on the Peer Task, which was in turn related to parental reports of children's social functioning outside the experimental situation. These findings contribute to the growing literature describing the benefits of cochlear implantation in the areas of communication and socialization, while pointing to interventions that may enhance deaf children's social competence.