Enjoyment of reading, diversity of reading and metacognitive awareness of reading strategies are cognitive and affective variables pertaining to three facets of reading engagement for students to read happily, widely and skilfully. These have been found to be related to effectiveness in reading instruction. They together form a focus for this study to examine the underlying student- and across-level mechanisms to explain gender differences in reading performance of Macao students. Drawing data from Programme for International Student Assessment (PISA) 2009 Study, the mediation effects of gender and the school's gender composition on reading performance are analysed. Two findings are of both theoretical and pedagogical interests. Firstly, the three facets of reading engagement from the nurture perspective explain substantially the within-school gender gap. Secondly, in coeducation context where students read happily and skilfully, there are gender-specific peer influences across-level onto student reading performance. Implications for gender-inclusive reading instruction programmes are discussed.