The pervasiveness of academic ability grouping, or streaming, as a means of organising students into instructional groups in New Zealand schools remains a dominant discourse, despite international and New Zealand research that casts doubt on the benefits of this practice. This article documents teachers' views on the effects of an innovative form of streaming in one small South Island secondary school. Years 9 and 10 students in this school were streamed not on the basis of academic ability, but on criteria that had been developed from the key competency of "managing self" (Ministry of Education, 2007). The main advantages of key competency streaming noted by teachers were those of student motivation, the opportunity to meet the perceived needs of different groups of students, and positive "flow-on" effects. Some concerns raised by the teachers were a lack of role models in the low key competency classes and the potential for stereotyping students, the lack of clarity about the criteria used to place students, the possibility of overlooking the needs of some students, and the long term effects of the streaming system. The authors suggest that discussions about streaming provide a valuable forum for professional learning and that these discussions should be situated within an ethical framework.