This chapter defines peer culture as a stable set of activities or routines, artifacts, values, and concerns that children produce and share in interaction with peers. It discusses on sociocultural theory that can benefit from theory and research in childhood studies and the notion of interpretive reproduction. To demonstrate processes of children creating peer cultures and establishing group identities the chapter considers the involvement of children of various ages in three different types of shared peer activities: ritualized sharing, improvised fantasy play, and shared acts of resistance to adult authority. The chapter considers the nature and development of affiliation or friendship in these and other shared features of children's peer cultures. It describes the three of many features of children's creation of new cultures in peer interaction: toddlers' non-verbal and verbal play routines, children's improvised fantasy play, and children strategies and secondary adjustments to challenge and get around adult rules.