Abusive supervision refers to subordinates’ perceptions of the extent to which supervisors engage in the sustained display of hostile verbal and nonverbal behaviors, excluding physical contact. This phenomenon is common in the workplace and exerts a negative impact on employees’ minds and behaviors. To date, most studies have examined the effects of abusive supervision from the perspective of the victim, but few have explored the consequences from the perspective of the bystander. In light of this, we investigated the internal mechanism and boundary conditions of peer abusive supervision affecting bystander behavior which was based on affective events theory. In order to test our hypotheses, three experiments (including one preliminary experiment and two formal experiments) were conducted. The pre-experiment was a 2 (abuse: yes vs. no) ×2 (relationship: strong vs. weak) between-subjects design to testify successful manipulation. In Experiment 1, the same design was used to explore the mediating effects of moral outrage and schadenfreude. The same experimental procedure was also used in Experiment 2 to verify the stability of the mediating mechanism, and to examine the boundary effects of peer abusive supervision on bystander behavior, as well as whether peer abusive supervision and peer relationships have an interaction effect on bystander behavior. All our hypotheses were supported. Our results indicated that: (1) Peer abusive supervision has indirect positive effects on defender behavior and negative effects on outsider behavior through the mediating effects of moral outrage; (2) Peer abusive supervision has indirect negative effects on defender behavior and positive effects on outsider behavior through the mediating effects of schadenfreude; (3) Peer relationships moderates the positive predictive effect of peer abusive supervision on moral outrage and the negative predictive effect on schadenfreude, i.e., the better the peer relationship is, the stronger the positive effect of peer abusive supervision on moral outrage and the weaker the positive effect on schadenfreude. (4) Peer relationship positively moderates the mediating effect of moral anger, i.e., the better the peer relationship is, the stronger the mediating effect of moral anger, while the peer relationship negatively moderates the mediating effect of schadenfreude, i.e., the better the peer relationship is, the weaker the mediating effect of schadenfreude. Our findings have several important theoretical and practical implications. In terms of theoretical implications, firstly, it introduces a new perspective, i.e., the bystander perspective to explore the mechanism of abusive supervision, which enriches the perspective of abusive supervision research. Secondly, two dimensions of bystander behavior, namely, defender behavior and outsider behavior, are taken as outcome variables of witnessing abusive supervision to expand the research scope of bystander behavior. Thirdly, it shows that organizational situational factors, such as peer relationships, have a certain influence on abusive supervision, revealing a relatively new boundary effect. There are also three main practical implications. Firstly, companies should provide managers with relevant training to reduce the occurrence of abusive supervision. Secondly, companies should establish an ethical workplace environment that motivates employees to take action to maintain justice in the face of abuse. Finally, companies should conduct regular group activities to create a friendly and cooperative organizational atmosphere.