<p>Children’s relationships with peers during the school years play an important role in their psychological health and future social relationships. Theory of mind (ToM) and empathy have been reported to be closely related to peer relationships. However, less is known about how these two factors interact with each other contributing to peer relationships. Thus, the current study aimed to investigate (1) the relations of ToM and empathy with peer relationships and (2) the interaction effect between ToM and empathy on peer relationships. A total of 60 first- to third-grade elementary school children (ages 7–10) participated in the study. ToM was assessed by a series of storytelling tasks including second-order false belief tests and Strange Stories. Empathy and difficulties in peer relationships were measured by parent reports. The results indicated that higher levels of empathy were associated with lower levels of difficulties in peer relationships whereas ToM did not have a significant relation with difficulties in peer relationships. A significant moderating effect of ToM on the association between empathy and difficulties in peer relationships was found, showing the negative association between empathy and difficulties in peer relationships was more pronounced for children with lower levels of ToM. These findings suggest that interventions for healthy relationships with peers should consider children’s levels of ToM and empathy.</p>