Little research has used in vivo, naturalistic observations to understand developmental processes related to bullying in early childhood. To test associations between how young children respond to experiences of peer victimization and changes in relational and physical bullying behaviors, a short-term longitudinal study using behavioral observations and teacher reports was conducted among 164 (84 females) preschool children (M = 47.76 months, SD = 7.41). Findings indicated that observed aggressive responses to school-based peer victimization was significantly associated with increases in teacher-reported relational bullying across the academic year. In addition, observed teacher reactions to peer victimization were significantly associated with increases in relational bullying across the academic year. The ways in which these findings extend the literature are discussed.