The development of empathy and the establishment of peer relationships significantly influence the quality of preschoolers' social lives. Past research consistently demonstrates a strong correlation between empathy and peer relationships. However, debates persist regarding causality. To provide evidence on this matter, we conducted a year‐long longitudinal study involving 160 preschoolers at T1, with 137 children (mean age = 60.99 months, SD = 3.51; 66 males) retained at T2, 1 year later. Our study employed a two‐wave design and cross‐lagged panel analysis. Data on empathy and peer relationships were collected through empathy story tasks and peer nominations. For the analysis of peer nominations, we selected three centrality measures from social network analysis: degree centrality (number of direct friendships), closeness centrality (proximity between network members), and betweenness centrality (control/mediation of information exchange). Results from the cross‐lagged panel analysis reveal that preschoolers' affective and cognitive empathy at T1 positively and significantly predict peer relationships at T2. Specifically, both forms of empathy predict degree centrality and closeness centrality. Additionally, hierarchical linear modeling indicates that, even after controlling for affective empathy, cognitive empathy significantly predicts both degree centrality and closeness centrality at T2. These findings underscore the importance of nurturing empathy, especially cognitive empathy, to enhance peer relationships among preschoolers. Consequently, educators can play a vital role in improving peer relationships by intervening in empathy development, promoting greater social interaction.