Aggressive student behavior is considered a leading risk factor for teacher stress. However, teachers' coping styles may affect how they perceive and respond to aggressive student behavior. This study tests whether teachers' perceptions of aggressive student behavior mainly mirror objectively observed aggression in presence of the teacher (as coded by external observers) or whether teachers' perception of aggressive student behavior primarily reflects teachers' avoidant coping styles, such as chronic worry and resignation. Finally, we examine whether observed and teacher-perceived aggression relates to increased vital exhaustion and psychophysiological stress among teachers (i.e., higher hair cortisol concentration). In an ambulatory assessment study, we administered self-reports to 42 Swiss teachers to assess perceived student aggression, chronic worry, resignation, and vital exhaustion. Additionally, four consecutive lessons per teacher were filmed, and aggressive student behavior in presence of the teacher was coded by four trained external observers. The concentration of cortisol was assessed in hair samples. Results showed that teacher-perceived and observed aggression were moderately associated. Observed aggression was related to teacher perceptions to a much lesser extent than teachers' avoidant coping styles, that is, chronic worry and resignation. While teacher-perceived student aggression was associated with teachers' self-reported vital exhaustion, we did not find any significant association with hair-cortisol concentration. Our findings suggest that teachers perceive student aggression through the lens of their coping styles. Teachers' dysfunctional coping styles are associated with an overestimation of student aggression. Teachers' overestimation of student aggression relates to higher levels of vital exhaustion. Therefore, it is crucial to identify and change teachers' dysfunctional coping styles to prevent a vicious cycle of dysfunctional teacher–student interactions.