Effects of heterogeneous and homogeneous grouping on the psychological functioning of Mexican American preschool children from economically disadvantaged families were investigated in a pilot project at San Jose State College Child Laboratory. Three experimental groups were composed of (1) 9 Mexican American children from low-income families and 9 Anglo children from middle-income professional families (heterogeneous), (2) 18 Mexican American children from low-income families (homogeneous), and (3) 17 Anglo children from middle-income professional families (homogeneous). Four measures of cognitive functioning and 3 behavioral measures were individually administered at the beginning of the school year and again 8 months later. Comparisons of mean gain scores on pre- and post-tests were computed. Data demonstrated that heterogeneous and homogeneous grouping both have a facilitating effect on cognitive growth and behavior modification. It was noted that further research is needed to identify the psychosocial dimensions of the learning environments in heterogeneous and homogeneous groups and to assess their contribution to cognitive change and behavior modification. Dimensions suggested in interpretation of data were the teacher's mode of coping with problem situations and interacting with children, the role of the teacher as a model for behavior modification and an agent of reinforcement, the nature of the interpersonal relationships among children, and the social-climate properties of the group. (JH)