Gender-segregated (GS) schooling has become popular in the United States despite the fact that every major review has concluded that GS schooling is not superior to coeducational schooling. Moreover, concern has been raised that GS schooling leads to negative effects, including increased gender stereotyping. We argue that these negative effects result from peer influences in gender-segregated peer contexts--including GS schooling. We also contend that educational policy makers need to understand these peer effects so that better decisions can be made about how children are grouped in classrooms and to create coeducational programs that promote tolerance and acceptance between girls and boys.