Background: An enduring question about achievement gaps is, which aspects of schools contribute most? At the early grade levels, when children spend the vast majority of their school day in a single classroom with a single teacher, school inequities that correlate with achievement gaps likely originate within the classroom. This study examined the degree to which three potential sources of classroom-based inequality contribute to reading and math achievement gaps that develop during first grade, including classroom context, access to a qualified teachers, and access to an effective teacher. The study also estimated the degree to which these effects are manifested among classrooms within the same school and between classrooms at different schools, which has implications for policy and practice. Population: A nationally representative sample of first graders from the Early Childhood Longitudinal Study was used. An important feature of ECLS data is that students were administered reading and math achievement tests near the beginning and near the end of first grade. This sampling design allows for the estimation of student achievement gains during first grade that does not include the summer period, which has confounded past efforts to study achievement gaps. Research Design: Multilevel models were used to estimate classroom-specific and school-specific random effects (i.e., residuals), which are conceptualized as within- and between-school classroom effects. These random effects were then used as outcomes to estimate the degree to which within- and between-school classroom effects contribute to Black--White and Hispanic-White achievement gaps that develop during first grade. Covariates for classroom context, access to a qualified teacher, and access to an effective teacher were entered into the model hierarchically to isolate their effects on the gaps. Conclusions: Classroom inequality within and between schools contributed substantially to achievement gaps that developed during first grade. Inequality in contextual aspects of classrooms was the most prominent school-based factor, the majority of which originated from classrooms in different schools rather than classrooms in the same school. However, compared to White children attending the same school, Black children tended to be members of a classroom with more negative contextual characteristics and a less effective teacher. This within-school inequity likely stems from non-random assignment of students to teachers. Finally, Black and Hispanic children were slightly less likely to be taught by a highly qualified teacher. However, that inequity did not significantly contribute to achievement gaps.