In this study, we investigate the relationship between academic-preparedness diversity within small learning groups and individual academic performance in science, technology, engineering, and mathematics (STEM) university courses. We further examine whether academic-preparedness diversity impacts academically more- and less-prepared students differently. We use data from 5367 university students nested within 1141 science, engineering, and mathematics learning groups and use a regression analysis to estimate the effect of group diversity, measured in two ways, on course performance. Our results indicate that academic-preparedness diversity is generally associated with positive learning outcomes, that academically less-prepared students derive greater benefit, and that less-prepared students fare best when they are not alone in a group of highly prepared students. Implications for teaching and small-group facilitation are addressed.