Observed 18 children in a short-term psychiatric facility over a 5-month period using a peer interaction coding system. The direct behavioral observation method was adapted and revised from existing scales to increase reliability and efficiency for use by institutional staff. Response codes included Ada tive Peer Interaction, Maladaptive Peer Interaction, Solitary Independent h a y , and Response to Staff. Reliability was assessed on 35% of the total coded intervals, which yielded an overall reliability coefficient of 94.3%. In addition, reliability coefficients were calculated for each individual component behavior, an extremely im ortant but often ignored statistic, and all yielded reliabilities greater than 908. Nonnative rates for children on the psychiatric unit also are presented, and discussion is provided concerning the application of this coding system in clinics, schools, and institutional settings.