Research Findings: This study examines the development of problem behavior in classroom contexts characterized by peer interaction among a nationally representative sample (N = 3,827) of U.S. low-income children from preschool entry to first grade. Latent growth mixture modeling was employed to identify unobserved subpopulations (latent classes) with shared trajectories of change, examine subpopulation members' social and academic outcomes in first grade, and identify demographic characteristics that serve as risk or protective factors for membership in different trajectory classes. Analyses reveal four common change trajectories (Progressive Optimal Adjustment, Stable Good Adjustment, Stable Adequate Adjustment, Progressive At-Risk Adjustment), which are differentiated by higher versus lower levels of problem behavior and relative change versus relative stability of the problem behavior trajectory. Classes with greater peer context behavior problems had typically poorer student-teacher relationships, greater parent-observed behavior problems, and lower reading and math skills at the end of first grade. Multiple child and family characteristics were differentially associated with class membership. Practice or Policy: These findings highlight the transition to formal schooling as a critical period in the development of peer context behavior for some--but not all--children, and suggest that children with peer context behavior problems may benefit from targeted academic and social-emotional support before entering first grade.