While peer buddy systems are widely used in inclusive classrooms, the mechanisms by which they affect academic outcomes remain untested. This study examined whether task engagement mediates the relationship between a peer buddy system intervention and academic performance among Grade 1 learners with special educational needs. Conducted across 28 public elementary schools in Sison District, Pangasinan II, Philippines, the study employed a true experimental pretest-posttest control group design with cluster randomization, using PLS-SEM for mediation analysis. Fourteen schools (56 learners) were assigned to the experimental group (six-week peer buddy system intervention) and 14 schools (56 learners) to the control group (usual instruction). Task engagement was measured using a 9-item pictorial scale; academic performance assessed letter recognition, counting, and following oral directions. Independent samples t-tests revealed that the experimental group demonstrated significantly higher posttest task engagement and academic performance than the control group (p-value<0.001), with large effect sizes. Paired t-tests showed the experimental group had significant gains in both engagement and performance (p-value<0.001), while the control group showed smaller but significant gains. PLS-SEM mediation analysis with 5000 bootstrapped resamples demonstrated that task engagement significantly mediated the intervention–performance relationship, accounting for 49.5% of the total effect. The peer buddy system improves academic outcomes primarily by increasing task engagement, offering a feasible, low-intensity intervention for under-resourced inclusive classrooms.