To test the effect of ability grouping on grades and the attainment of higher education, this study examines a naturally occurring experiment--an admission reform that dramatically increased ability sorting between schools in the municipality of Stockholm. Following six cohorts of students (N = 79,020) from the age of 16 to 26, I find a mean effect close to zero and small positive and negative differentiating effects on grades. With regard to the attainment of higher education, I find a mean effect close to zero, the achievement group gap was unaffected, the immigrant-native gap increased, and the class background gap decreased. These results are consistent with much previous research that has found small mean effects of ability grouping. They are inconsistent with previous research, however, in that I find ability grouping's effects on gaps are rather small and point in different directions.