I suggest two things.
 
First role play with your daughter.
 
Sometimes start out using her stuffed animals as puppets talking and work her way up to saying it on her own. Practice saying things like, "Knock it off!' and "Leave me alone!" and possibly, " the boys name, will you give it a rest already!"  With that also practice "the look," a level stare for 3 seconds.  She can be quaking in her boots inside but just seeming self-assured will cause many a bully to back down.  Also practice being very blase with a bully. Ignoring, pretending to be bored with what he is saying, or even agreeing with whatever dumb thing he is saying to take the sting of of his words. "Yes, I am icky and  I like it. Ickiness rules! All the best people are icky"  This can actually turn into a very silly ongoing conversation between them that becomes more of a friendship ritual.
 
Secondly, if the bullying doesn't stop, if he is physically hurting her, or being sexually explicit go to your friend as well as the teacher.
Calmly say there seems to be a little problem between the two. You don't know how it started and quite possibly she said or did something that has caused him to overreact in this manner.  perhaps there are troubles going on at home that are causing him to act out.  Always give the benefit of the doubt. Explain calmly what has been going on and that it is really bothering your girl. Hopefully the other mom will apologize, talk to her son, have him apologize and things will get better. If not, perhaps it is time to quietly make some other friends.
 
It is best to let kids handle as much conflict like this themselves. Just because the parents are friends does not mean the kids have to be best friends. You can't force friendship.

I think that the girl must like him as a boyfriend instead a friend! It is known that girls will bullie boys when they like them! Maybe you should ask him if he thinks that she likes him! Even if she doesnt like him, He might mentaly look at her diferant and think of her in a diferant way and then things would change! As long as he is thinking that he is the head honcho maybe he will not worry about it!

Hi worriedm,
 
Education.com has lots of bullying resources that I'll post below. But I think the toughest thing about your situation is that you're friends with the mom of the child who's bullying your child. As hard as it might end up being, I think you have to put your son's health and safety in front of that friendship. The newest bullying research actually shows that better outcomes are achieved when parents work through the school to help their bullied kids than when they go directly to the parents of the bully. But I think it your case it's different.
 
I'd have a talk with your son to try to learn as much as you can about what's happening. Then ask the other mom to have coffee or something when the kids aren't around. You don't have to go into the conversation accusing her daughter. You can just say "I don't know if "Jane" has talked to you about this or not but "John" has been kind of upset about their friendship recently. I'm hoping you and I can work together to get things back on track".
 
Hopefully, she'll be open to what you have to say and the two of you can work out a plan to help both of your kids through the situation. If she instead becomes very defensive and tries to make it sound like it's all your son's problem, then I think you have to put the adult friendship aside and approach the situation as you would with any other kid...working with the teacher, counselor, or principal at the school.
 
I'm sorry you're in this tough situation...best of luck to you and your son.
 
Kat

Oops. Switch what I said. I mixed up the daughter and you son when answering.  Same answer  applies. Sorry.

Thank you for all your advise. I had a talk with the girls mom and we both agreed to have a meeting with the teacher. Both children listened to how each was feeling about the issues they were having. Both agreed to treat each other with respect and be nice to one another. Also to help each other and to go tell the teacher right away if the problem arise again between the both of them or with others. there is always two sides to a story and Im glad that we have work things out and now the kids know that moms and teacher are there to help and we can work things out without pushing, hitting and name calling.