Background Peer-assisted learning (PAL) increasingly features within medical school curricula. While there is evidence of its effectiveness, less is known about how it promotes learning. Cognitive and social congruence between peer-tutor and student have been described as important concepts underpinning teaching and learning in PAL. We employed interpretative phenomenological analysis for an in-depth exploration of how medical students experience PAL sessions. Methods We conducted the study at The University of Manchester within a near-peer scheme aimed at developing clinical skills within clinical clerkship students. We conducted individual interviews with three peer tutors and five students. We undertook interpretive phenomenological analysis of interview transcripts. We subsequently synthesised an account of the study participants’ lived experiences of PAL sessions from individual personal accounts to explore how medical students experience peer-assisted learning. This analysis was then used to complement and critique a priori educational theory regarding the mechanisms underlying PAL. Results Students experienced PAL sessions as a safe and egalitarian environment, which shaped the type and style of learning that took place. This was facilitated by close relationships with peer-tutors, with whom they shared a strong sense of camaraderie and shared purpose. Peer-tutors felt able to understand their students’ wider sociocultural context, which was the most important factor underpinning both the PAL environment and tutor-student relationship. Participants contrasted this relative safety, camaraderie and shared purpose of PAL with teaching led by more senior tutors in clinical settings. Conclusions This study provides a rich description of the important factors that characterise medical students’ experiences of PAL sessions. Participants felt a strong sense of support in PAL sessions that took into account their wider sociocultural context. Multiple factors interplayed to create a learning environment and tutor-student relationship that existed in contrast to teaching led by more senior, clinical tutors. The insight generated via IPA complemented existing theory and raised new lines of enquiry to better understand how the peer relationship fosters learning in PAL at medical school. We make recommendations to use insights from PAL for faculty and curriculum development. Electronic supplementary material The online version of this article (10.1186/s12909-018-1291-2) contains supplementary material, which is available to authorized users.