A child's ability to initiate and maintain positive and competent interaction with peers is an important developmental task of childhood. In this study, we have examined how children's temperament and maternal rearing practices are related to children's social competence and modes of interaction with peers. Seventy five mothers and their children were studied at age 2 1/2 and again at age 5. Children who as toddlers were assessed as shy and inhibited in new situations were highly passive and withdrawn in the play situation with unfamiliar peers 2 to 3 years later. Children whose mothers used highly power-assertive and unclear methods of discipline were less competent in social interaction with peers than children whose mothers were noncoersive but clear in their regulatory practices.