Despite considerable research demonstrating the adverse consequences of child maltreatment, including a heightened risk for adaptational failures and psychopathology, longitudinal evaluations of processes contributing to negative outcomes have been limited. Problems in peer relations constitute a critical developmental risk for future maladaptation among maltreated children, transferring relationship disturbance from the family to new interpersonal contexts. The linkages of a history of child maltreatment to early deviations in cognitive/affective processes, which subsequently lead to difficulties in peer relations were examined. Specifically, in a sample of 46 maltreated and 43 nonmaltreated low-income children, laboratory assessments of affect understanding and cognitive control functioning were conducted, followed by later peer and teacher assessments of peer relations in the school setting. Maltreated children were shown to evidence early deviations in their understanding of negative affect as well as immaturity in their cognitive controls. Maltreated children also were shown to have lower social effectiveness and higher levels of undercontrolled and aggressive behavior in the school setting. Physically abused children were found to be more rejected by their peers. Cognitive control functioning partially mediated the effect of maltreatment on later social effectiveness. Negative affect understanding mediated both the relation of maltreatment on later dysregulated behavior in the peer setting and the effect of physical abuse on later rejection by peers. The results are discussed in terms of their support for organizational/transactional theory and the implications they have for prevention and intervention. © 1995, Cambridge University Press. All rights reserved.