Preschool teachers have important impacts on children's academic outcomes, and teachers' misperceptions of children's academic skills could have negative consequences, particularly for low-income preschoolers. This study utilized data gathered from 123 preschool teachers and their 760 preschoolers from 70 low-income, racially diverse centers. Hierarchical linear modeling was utilized to account for the nested data structure. Even after controlling for children's actual academic skill, older children, children with stronger social skills, and children with fewer inattentive symptoms were perceived to have stronger academic abilities. Contrary to hypotheses, preschoolers with more behavior problems were perceived by teachers to have significantly better pre-academic abilities than they actually had. Teachers' perceptions were not associated with child gender or child race/ethnicity. Although considerable variability was due to teacher-level characteristics, child characteristics explained 42% of the variability in teachers' perceptions about children's language and preliteracy ability and 41% of the variability in teachers' perceptions about math ability. Notably, these perceptions appear to have important impacts over time. Controlling for child baseline academic skill and child characteristics, teacher perceptions early in the preschool year were significantly associated with child academic outcomes during the spring both for language and preliteracy and for math. Study implications with regard to the achievement gap are discussed.