The purpose of this study is to understand the role of school relationships in shaping students' character development in middle childhood. Students and teachers completed surveys on student-teacher relationships, peer relationships, social-emotional learning (SEL), parent-teacher communication, and character strengths of fairness, hope, bravery, teamwork, self-regulation, social responsibility, and prosocial leadership. Participants were 1881 Brazilian children in fourth or fifth grade across 288 classrooms and 60 schools. Data were analyzed using a multi-level model framework. Higher student-student relationships were associated with higher starting scores of character strengths paired with a stronger increase among classes whose relationships improved over time. Higher quality student-teacher relationships were associated with a larger increase in character strengths among boys. Teachers' usage of SEL strategies, student-teacher relationships and student peer relationships were important predictors of both classroom baselines and the change in character strengths across time. Most of the existing literature on character strengths is based on older adolescent samples from affluent countries and with little Latin American representation. This study supports existing literature on the relevancy of character strengths in the educational context, but adds the importance of seeing it as a contextual and relational outcome.