The inclusion of students with disabilities into regular physical education classes has provided a big challenge to physical educators. In order to strive to meet the needs of all of their students, physical educators always attempt to use different teaching strategies to improve the quality of teaching and learning. One of the approaches used in inclusive physical education is cooperative learning. The purpose of this study was to investigate the effects of cooperative learning on teacher-student interactions and peer relationships of a student with intellectual challenges in the inclusive physical education class. The participant was a fifth grade student with mild intellectual challenges integrated into a class of 30 students. Single subject withdrawal design was used in this study. The independent variable of this study was the treatment of cooperative learning. The dependent variables of this study were the changes in teacher-student interactions and peer relationships. Social status of student with intellectual challenges, observation of teacher-student interactions check lists, and questionnaires of peer relationships and cooperative learning were used to collect data. The study was conducted for 9 weeks, twice per week, with eighteen 40-min lessons, using cooperative learning approach. The data were analyzed by visual analysis, C statistics, constant comparison and triangulation method. The results of this study were as followings: (1) Cooperative learning could increase the teacher-student interactions of student with intellectual challenges. (2) Cooperative learning could increase the social status, and the peer relationships of the student with intellectual challenges. (3) Cooperative learning could increase the initiative and passive behavior of teacher-student interactions and peer relationships of the student with intellectual challenges. The initiative behavior of the teacher-student interactions was mainly “group honor”. The passive behavior of the teacher-student interactions was “expecting to receive feedback”. The initiative behavior of the peer relationships was “to cause the attention of peer” while the passive behavior of the peer relationships was “subjected to peer”. (4) Cooperative learning was accepted by the students, the physical education teacher, special education teacher and mentor as an effective instructional strategy. The findings of this study have implications for physical education teachers and researchers.