Although practiced widely in management education, grading of student participation in class discussions has been criticized by researchers: The instructor simultaneously adopts two incompatible tasks of facilitating class discussion and evaluating student participation; students play for points instead of focusing on learning; and common, instructor-based grading schemes do not motivate all students equally. This article proposes a grading system that addresses these three concerns. The proposed system gives students peer feedback within the domain of participation in class discussion enabling instructors to focus on creating learning opportunities in the classroom. The proposed grading system, with interrater reliability exceeding 0.80, can easily be modified by individual instructors to suit their teaching styles.