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This study investigated the interaction between perceived difficulty and both perceived and actual skill in the context of a moderately difficult reading task. The aim was to explore how these unique difficulty-skill relationships influenced middle school students' on-task motivation (intrinsic motivation, emotions, persistence) and reading fluency. Findings indicated significant interactions between perceived difficulty and both perceived and actual ability, with diverse influences across different outcomes, and a three-way interaction for reading fluency. Furthermore, students with high perceived or actual ability reported higher motivation when perceived difficulty was also high. These findings suggest that the challenge-skill relationship can be extended to encompass actual skill, and that perceived and actual skill—when paired with perceived difficulty—can have diverse effects on motivation.