Peer teachers have been found to be effective instructors during simulation-based education. However, there is a lack of research regarding their professional identity development throughout the course of the teaching activity. The purpose of this qualitative study, therefore, was to develop a framework to illustrate how peer teachers develop as educators during a prehospital simulation. The participants in our study were 9 second-year medical students serving as peer teachers during a multiday prehospital simulation. We selected the grounded theory tradition of qualitative research to investigate the peer teachers' professional identity development. Our research team interviewed each participant twice during the simulation. We then used open and axial coding to analyze the interview data. We organized these codes into categories and determined connections between each category to construct our grounded theory framework. This framework described how the peer teachers progressed through 4 stages: 1) eager excitement, 2) grounded by challenges, 3) overcoming challenges, and 4) professional identity formation. Our results revealed that simulation-based education can serve as valuable learning environment not only for medical students, but also for peer teachers. Understanding their progressive development during the simulation will help medical educators focus on maximizing the peer teachers' growth and development during simulation.