This article uses a regression discontinuity approach to study the influence of New York City's school grading policy on student math and English language arts (ELA) achievement. We find evidence that students in schools receiving a failing grade realized positive effects in English in the 1st year of sanction, but we find no statistically significant effect during the 1st year of sanction on student math achievement. There is no evidence that receiving letter grades other than F had positive effects. Finally, we show that students in schools that received an F-grade in the 1st year continued to realize a positive average ELA effect in the 2nd year and that a positive math effect was evident as well. (Contains 2 notes, 4 figures, and 9 tables.)