arXiv:2605.12652v1 Announce Type: new Abstract: Large language models are often post-trained with sparse verifier rewards, which indicate whether a sampled trajectory succeeds but provide limited guidance about where reasoning succeeds or fails. On-policy distillation (OPD) offers denser token-level supervision by training on student-generated trajectories, yet existing methods typically distill each rollout independently and ignore the other attempts sampled for the same prompt. We introduce Multi-Rollout On-Policy Distillation (MOPD), a peer-conditioned distillation framework that uses the student's local rollout group to construct more informative teacher signals. MOPD conditions the teacher on both successful and failed peer rollouts: successes provide positive evidence for valid reasoning patterns, while failures provide structured negative evidence about plausible mistakes to avoid. We study two peer-context constructions: positive peer imitation and contrastive success-failure conditioning. Experiments on competitive programming, mathematical reasoning, scientific question answering, and tool-use benchmarks show that MOPD consistently improves over standard on-policy baselines. Further teacher-signal analysis shows that mixed success-failure contexts better align teacher scores with verifier rewards, indicating that the gains arise from more faithful, instance-adaptive supervision. These results indicate that effective on-policy distillation should exploit the student's multi-rollout trial-and-error behavior rather than treating rollouts as isolated samples.