Peer interaction can be challenging in autism spectrum disorder, but naturalistic peer-observation scales for preschoolers are scarce. This study examined psychometric qualities of the newly developed Autism Peer Interaction Observation Scale. We tested the Autism Peer Interaction Observation Scale to (a) characterize peer interactions of preschoolers with autism spectrum disorder who were cognitively able versus typical age-mates, (b) explore each group's hierarchical pattern of peer interaction behaviors, and (c) identify Autism Peer Interaction Observation Scale's links with standard reports for assessing social-communication functioning (Vineland Behavior Scales, 2nd ed.), social impairment (Social Responsiveness Scale, 2nd ed.), autism severity (Autism Diagnostic Observation Schedule, 2nd ed.), and intelligence quotient (Mullen) in the cognitively able preschoolers with autism spectrum disorder group. Participants comprised 85 preschoolers (50 cognitively able preschoolers with autism spectrum disorder, intelligence quotient > 75; 35 typical). Groups were matched for age, intelligence quotient, and maternal education. Significant group differences emerged on all Autism Peer Interaction Observation Scale categories, in favor of typical. In cognitively able preschoolers with autism spectrum disorder, correlation analyses indicated that more typical peer relations on Autism Peer Interaction Observation Scale were linked with better adaptive and socialization skills (Vineland Behavior Scales, 2nd ed.) and fewer social atypicalities (Social Responsiveness Scale, 2nd ed.). Higher intelligence quotient scores were linked with better Autism Peer Interaction Observation Scale social-communication functioning. Only a few Autism Peer Interaction Observation Scale social-communication categories significantly correlated with the Autism Diagnostic Observation Schedule, 2nd ed. Findings highlight the Autism Peer Interaction Observation Scale as differentiating between groups and providing knowledge about peer interaction in natural settings. This new tool can help personalize social-communication programs and evaluations of early intervention outcomes.