Background Peer education is widely used in nursing education; however, its effectiveness in developing psychomotor skills remains unclear. Objective To compare the effectiveness of peer education and instructor-led training on nursing students’ knowledge and skills in newborn physical growth assessment. Methods A randomized controlled trial was conducted with 80 nursing students assigned to either peer education (n = 40) or instructor-led training (n = 40). Knowledge was assessed using the NPGA-KT, and skills were evaluated using the NPGA-SCL. Results No statistically significant differences were found between the groups in knowledge scores at any time point (p > 0.05). However, students in the instructor-led training group demonstrated significantly higher performance in most skill domains, including height, weight, head circumference, and chest circumference measurements (p < 0.05 to p < 0.001), whereas no significant difference was observed in abdominal circumference measurement. Conclusion Peer education appears to be as effective as instructor-led training in promoting theoretical knowledge acquisition. However, instructor-led training is more effective in developing psychomotor skills. Therefore, while peer education may serve as a valuable complementary instructional strategy, it should not be used as a standalone method for skill-based training in newborn physical growth assessment. Clinical trials registration number NCT06504745.