Despite the vast research by nursing professionals on various methods of nursing education, little research has been conducted exploring the efficacy of peer learning as a teaching-learning tool amongst registered nurses. Hence, this study was conducted among in-service nursing officers to evaluate the usefulness of simulation-based peer learning sessions as an educational tool for capacity building. Using a pre-test and post-test design, the study was conducted among 150 in-service nurses at a tertiary care hospital. Five structured simulation-based, peer learning modules were designed. The nurses were divided into five groups using random and purposive sampling. Each group attended one session of the peer learning module on advanced nursing care by simulated clinical and nursing care 'demonstrate, observe, assist, and perform' (DOAP) activity. Pre-test, post-test, and retention tests (after two months) were conducted, and the results were compared. There was a significant increase in mean knowledge (p-value < 0.05) in the post-test after all five sessions, which shows the effectiveness of such peer learning sessions in improving the baseline. There was a decline in mean scores in the retention test compared to that of the post-test, which was statistically significant in only the group of learners participating in the first session. The study provides substantial evidence that simulation-based peer learning is an effective tool for continuing nursing education, and it can be used as a valuable tool to reduce the documented theory-practice gap.