Adolescents, particularly early adolescents, are vulnerable to stress created by negative peer interactions. Stress, in turn, can lead to increased mental health problems and reduced academic engagement, in addition to negative long-term consequences for cognitive development and physical health. Using four waves (2 years) of data from a cluster randomized trial (N = 15 middle schools, 1,890 students, 47.1% female, 75.2% White), we evaluated whether enhancements to peer relations, brought about through carefully structured small-group learning activities (i.e., cooperative learning), could reduce stress and emotional problems and promote academic engagement. We hypothesized that the increased social contact created by cooperative learning would promote greater peer relatedness, reducing student stress and, in turn, reducing emotional problems and promoting academic engagement. Our results confirmed these hypotheses. We conclude that cooperative learning can provide social, behavioral, academic, and mental health benefits for students.