Peers have a significant impact on children's learning and development (e.g., Rubin, Bukowski & Bowker, 2015; Sawyer, 2015; Corsaro & Eder, 1990). Interactions with other same age children not only influence children's social, cognitive and emotional competencies, but importantly constitute the very grounds for their development. Previous research has shown that peers have a critical role in children's language learning, cognitive skills, physical wellbeing as well as in socio-cognitive areas of development, like collaboration, cooperation and pro-sociality. While this body of work has significantly advanced our understanding of the nature of peer interactions, there is still a dearth of knowledge on how children orient to and address the worries, concerns or suffering of their peers in everyday settings, namely, to act with compassion. To this end, in this chapter we will present our cultures of compassion approach (Lipponen, Rajala, & Hilppö, 2018) to studying compassion in children's peer interactions in a Finnish kindergarten and share an example of our video ethnographic work and interaction analysis on compassion. We will conclude our chapter by discussing how it is possible to foster compassionate peer cultures in early child education and care settings. Hilppö, J., Rajala, A., & Lipponen, L. (in press). Compassion in Children's Peer Cultures. In Georgina Barton and Susanne Garvis (Editors), Compassion and empathy in educational contexts, chapter 5, Palgrave Macmillan.