The purpose of this study was to examine relations between shyness-sensitivity and social competence, school performance, and psychological well-being in Chinese children with rural and urban backgrounds. Participants were students in rural migrant children schools and city schools in China (Ns = 411 and 518, respectively; M age = 10 years). Data were obtained from peer evaluations, teacher ratings, self-reports, and school records. It was found that shyness was associated with social and school problems and depression in urban children. However, shyness was generally associated with indexes of adjustment such as leadership, teacher-rated competence, and academic achievement in rural migrant children. The results indicate the role of context in defining the functional meaning of social behavior in children's adjustment.