Drawing on the programme for international student assessment 2009 US data-set, this study examines the relationship between formative assessment and students' reading achievement using a structural equation modelling approach. We find that formative assessment is positively related to students' reading achievement directly and indirectly (through teacher-student relationship and attitude towards reading) for all students. The direct relationship between formative assessment and reading achievement is significantly stronger for Black students than for White students, whether or not student socio-economic status (SES), gender and school mean SES are controlled for. The total relationship (the direct plus the indirect relationship) between formative assessment and reading achievement also appears to be stronger for Black students than for White students; however, the difference is not statistically significant whether or not we control for covariates. No significant difference is found between White and Hispanic students in terms of the direct and the total relationship between formative assessment and reading achievement. Using a nationally representative data-set, this study provides empirical evidence that formative assessment is positively related to students' reading achievement in general. In addition, this study provides preliminary evidence to show the potential of formative assessment to help reduce achievement gaps between Black and White students. The implications and limitations of the study are also discussed.