Currently, education places a focus on teamwork, with empathy playing an important role in the coherence of teammates embark on project based learning (PBL). It is often difficult to persuade students to reach an agreement when they are working in groups. Enhancing empathy may reduce arguments and conflict during teamwork Creating interactive learning environments (ILEs) has been recognized as a major approach to improving students' ability to express the empathy necessary to enhance teamwork and acquire heterogeneous competencies. In this study, Taiwanese junior high school students were placed into teams to brainstorm and devise innovative ideas and complete team projects. Students were instructed to shoot a film on bullying. The project was intended to improve their abilities in perspective taking, affective response, emotional regulation, self/other awareness, empathy, and competence. Study results suggest that peer learning incorporating PBL and ILE can significantly increase students' empathy and functional competence acquisition. Results also show empathy is a key mediator between peer learning and competence acquisition.