This study contributes a novel perspective on grade retention by empirically examining how classroom composition relates to the standardized-testing performance of grade-retained students in their post-retained years. This evaluation employed a sample of entire cohorts of urban elementary school children in the Philadelphia School District over 6 years of observations. For the approximate 21% of students retained in the sample, the results demonstrate that as retained students are placed in classrooms with higher average and greater standard deviation in peer ability, they tend to achieve lower testing outcomes in their post-retention years compared to their continuously promoted counterparts. Further investigation also shows that these relationships are not solely driven by having low levels of achievement. Implications are discussed. (Contains 6 tables and 4 notes.)