A small subset of dimensions within language Transformers’ representation spaces emerge as “outliers” during pretraining, encoding critical knowledge sparsely. We extend previous findings on emergent outliers to Encoder-Decoder Transformers and instruction-finetuned models, and tackle the problem of distilling a student Transformer from a larger teacher Transformer. Knowledge distillation reduces model size and cost by transferring knowledge from a larger teacher to a smaller student, necessitating a trade-off among representation dimensions. We show that emergent outlier dimensions contribute significantly more to zero-shot performance than non-outlier dimensions. Based on this, we propose the Emergent Outlier Focused Distillation (EOFD) method, which prioritizes critical outlier dimensions in distillation using a weighted MSE loss. We empirically demonstrate that EOFD outperforms state-of-the-art distillation methods and generalizes well across Encoder-only BERT, Decoder-only GPT-2, and Encoder-Decoder T5 architectures.