The positive peer relations arising from cooperative learning can contribute to the development of affective empathy, which in turn can reduce bullying (Van Ryzin & Roseth, 2019). However, from a theoretical perspective, the direction of effects between peer relations and empathy could be in the opposite direction, or bi-directional. In the current paper, we employed a process-oriented approach (i.e., cross-lag difference score modeling; McArdle, 2009) to investigate the longitudinal relationship between positive peer relations and affective empathy, as well as their joint effect on bullying. Using four waves of data from a cluster randomized trial including 15 middle schools (7 intervention and 8 control schools; N =1,890 students, 47.1% female, 75.2% White), we found a bi-directional or reciprocal relationship between peer relations and affective empathy, and change in both constructs predicted lower levels of bullying. Cooperative learning predicted positive change in peer relations and affective empathy, as well as lower levels of bullying. These results suggest that the structured social interactions that occur during cooperative learning can enhance student interpersonal relations, and simultaneously the experiential skill building of cooperative learning can contribute to a more profound understanding of the emotional states of others. These effects amplify one another and, in turn, significantly reduce bullying in middle school. Given that cooperative learning has already been demonstrated to enhance academic motivation and achievement (Roseth et al., 2008), we argue that cooperative learning offers an effective, attractive alternative to traditional curriculum-based bullying prevention programs (National Library of Medicine [NLM], NCT03119415).