Peer assessment operates bi-directionally which enables students to play dual roles as assessors and assesses. This unique assessment experience not only provides students with good chances to engage with standards of work and understand assessment purposes, but also cultivates their skills to evaluate others’ work, give feedback, and use feedback from others. Therefore, peer assessment could be regarded as a powerful way to cultivate student assessment literacy. This chapter first analyzes learning theoretical framework of the peer assessment approach and synthesizes influencing factors via the lens of multiple perspectives such as social constructivism, socio-cultural approach, socio-cognitive perspective, and socio-material approach. After theoretical discussion, relevant empirical studies at different levels of education are reviewed to identify the impacts of peer assessment on student assessment literacy, crucial design features of peer assessment and influencing factors. Accordingly, practical suggestions on designing and implementing peer assessment to promote student assessment literacy are provided at the end of chapter.