This study investigates the evolving role of peer feedback within the framework of learning-oriented language assessment (LOLA). As language education increasingly prioritizes formative assessment practices, peer feedback emerges as a key strategy for promoting learner autonomy, reflection, and deeper engagement with language learning processes. Drawing on classroom-based research and discourse analysis, this study explores how peer feedback practices have transformed in response to pedagogical shifts toward collaborative learning and assessment for learning. Findings reveal that when effectively scaffolded, peer feedback not only enhances linguistic accuracy and communicative competence but also fosters a supportive learning environment. However, the success of such practices depends on clear guidance, assessment literacy, and student trust. The study offers practical recommendations for integrating meaningful peer feedback into language assessment frameworks that support sustained learning outcomes.