Ethnic and racial disparities in educational outcomes, such as test scores, are a core issue of educational research. While the role of student and family factors in the formation of such disparities is well established, existing studies fail to draw a similarly clear picture of how teachers contribute to ethnic and racial achievement gaps. In contrast to previous studies, which focussed on the consequences of rather blatant forms of discrimination, such as in teachers' grading practices, this study investigates rather subtle processes that might result in discrimination of ethnic and racial minority students. In particular, I address stereotypes among teachers and analyse if they induce bias in their achievement expectations for ethnic minority school beginners. Additionally, I analyse if such bias results in a self-fulfilling prophecy and contributes to ethnic achievement gaps at the end of first grade. Multilevel regressions applied to a sample of 1007 children and 64 teachers in German primary schools reveal that different teachers internalize distinct stereotypes regarding ethnic achievement gaps and the achievement-related attributes of ethnic minority students. I also find that teachers with more negative stereotypes expect lower mathematics and reading achievements for ethnic minority students at the beginning of first grade. However, although I replicate the finding that inaccurate teacher expectations result in a self-fulfilling prophecy, I find no statistically significant effects of teacher stereotypes on ethnic differences in the development of students' reading and mathematical skills throughout first grade.