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Peer victimization is a highly stressful experience that impacts up to a third of all adolescents and can contribute to a variety of negative outcomes, including elevated anxiety, depression, drug use, and delinquency, as well as reduced self-esteem, school attendance, and academic achievement. Current prevention approaches (e.g., the Olweus program) have a mixed record in American schools. We propose a new approach to prevention that leverages theory and research surrounding the social aspects of bullying and victimization, particularly peer relations. Our approach attempts to (a) break down the process of homophily among bullies and (b) provide a mechanism by which socially isolated students can develop new friendships. Our approach asks teachers to increase opportunities for positive peer interaction through carefully structured, group-based learning activities in school (i.e., cooperative learning). We hypothesized that these positive peer interactions would result in reductions in bullying, victimization, perceived stress, and emotional problems, as well as increases in peer relatedness, among more marginalized students. Using a cluster randomized trial with 15 rural middle schools in the Pacific Northwest (N = 1,460 7th-grade students), we found that cooperative learning significantly reduced bullying, victimization, and perceived stress for marginalized students (i.e., moderated effects) and reduced emotional problems and enhanced relatedness for all students (i.e., main effects). Given that cooperative learning has already been shown to enhance student engagement and achievement in prior research, our results demonstrate that cooperative learning should be a permanent, sustainable component of teacher training and school culture.