Peer instruction (PI) has been introduced as a collaborative learning strategy for the introductory physics course for engineering students at Ghent University and in this paper results for the magnetism part are reported. Using the magnetism concept inventory, a test instrument comparable to the better known force concept inventory, the positive impact of PI has been demonstrated by comparing two similar student populations and measuring the Hake gain factor. Special attention has been paid to the enhancement of the traditional lecture demonstrations by PI and a number of worked out examples are given. The framework of Vygotsky's zone of proximal development is offered as a pedagogical explanation for the effectiveness of PI.