This report presents findings from the Cost, Quality, and Outcomes Study, a 5-year, ongoing longitudinal study examining the effects of child care in 4 states. The report focuses on the emergence of the quality of children's early relationships with their teachers in childcare as an important predictor of their social relations with peers as they become older. Relevant findings from the study indicate that children who rated high in peer aggression, disruption, and social withdrawal were rated high in child-teacher relationship conflict and low in child-teacher relationship closeness. Children who rated high in prosocial behavior with peers were also were rated high in child-teacher relationship closeness and low in child-teacher relationship conflict. Classrooms with higher levels of behavior problems had lower levels of child-teacher closeness. The report lists predictive factors for children's second-grade social competence with peers, aggression ratings, disruption ratings, prosocial ratings, and ratings of social withdrawal. The attachment theory underpinning the perspective on teacher-child relationships is also explained. The report considers implications of these findings for child care teachers and elementary school teachers. (KB)