With the increasing popularity and scale of peer teaching, it is imperative to develop methods that ensure the quality of teaching provided by undergraduate students. We used an established faculty development and quality assurance process in a novel context: peer observation of teaching for undergraduate peer tutors. We have developed a form to record observations and aid the facilitation of feedback. In addition, experienced peer tutors have been trained to observe peer-taught sessions and provide tutors with verbal and written feedback. We have found peer observation of teaching to be a feasible and acceptable process for improving quality of teaching provided by undergraduate medical students. However, feedback regarding the quality of peer observer’s feedback may help to develop students’ abilities further.