The present study investigates school context effects on psychosocial characteristics (academic self-concept, peer relations, school satisfaction, and school anxiety) of high-achieving and gifted students. Students who did or did not make an early transition from elementary to secondary schools for high-achieving and gifted students in 5th grade in Berlin, Germany, are compared in their psychosocial development. The sample comprises 155 early-entry students who moved to an academically selective secondary school ("Gymnasium") and 3,169 regular students who remained in elementary school until the end of 6th grade. Overall, a complex pattern of psychosocial development emerged for all students, with both positive and negative outcomes being observed. Specifically, the transition into academically selective learning environments seemed to come at some cost for psychosocial development. Propensity score matching analysis isolating the effects of selective school intake and the school context effect itself revealed negative contextual effects of early transition to "Gymnasium" on academic self-concept and school anxiety; additionally, the positive trend in peer relations observed among regular students was not discernible among early-entry students.