This study employed mother-child playgroups as a context for examining mothers' supervision of child-peer interactions and children's adaptation to a new peer-group setting. Six playgroups, consisting of quartets of mothers and their 24- to 54-month-old children (n = 23), were observed in ten 90-minute sessions. All mothers attended the first two days of playgroup; only two mothers were present on each of the remaining days, rotating supervision responsibilities. Ratings were made of mothers' behaviour toward their own and others' children and children's behaviour toward the mothers and peers. Children were oriented mainly toward their own mothers on the first two days of playgroup, but became increasingly involved in cooperative and parallel play with peers over time. Children were more likely to be involved in peer-oriented play when their own mothers were present, and children of mothers who were judged to be more skilful supervisors were less likely to engage in solitary play. These findings converge with other evidence in supporting the usefulness of playgroup experiences for scaffolding children's early peer interactions and for facilitating children's transition between home and more formal educational settings such as preschools and daycare. (Contains 3 tables and 1 note.)