Although the necessary role of differentiation in special education is well established in the literature, little is known about its social and peer interaction implications from the student perspective. The present qualitative study aims at offering detailed observational analyses of the meanings that 7- to 9-year-old students give to differentiated instruction in its initial phases in authentic classroom activities. The results were yielded from an ethno-methodological conversation analysis of the video-recordings of authentic classroom situations in a part-time Finnish special education setting (N = 12 lessons). The results revealed that whilst differentiation as a pedagogical solution serves to meet children's individual learning needs, students used knowledge of the differentiated treatment as a means by which to construct an understanding of their abilities in relation to those of their classmates or to seek self-enhancement over their peers. (Contains 5 extracts.)