While peer observation of teaching is regarded as an important part of a faculty member's promotion and tenure portfolio, little has been reported on its usefulness. Results from this study indicate that both observers and observees value the peer observation process, are neutral about the adequacy of observer training, use a variety of observation instruments but favor the written narrative, and believe their peer observation instruments are an effective measure of teaching. Although observers feel more stress about peer observations than observees, both groups experience minimal stress in participating in observations. Both groups also believe that peer observation reports are valid and useful. (Contains 5 tables.)