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This study investigates the longitudinal psychosocial development of fifth grade students in Berlin, Germany, with a focus school context effects on psychosocial characteristics (academic self-concept, school satisfaction, school anxiety, peer relations) of high-achieving and gifted students. The sample comprised N = 155 students who moved to an academically selective secondary school (Gymnasium) who were compared to N = 3169 students who remained in elementary school. Overall, a complex pattern of psychosocial development emerged for all students. Propensity score matching analysis isolating the effects of selective school intake and the school context effect itself revealed negative contextual effects of early transition to Gymnasium on academic self-concept and school anxiety, and a lack of a positive trend in peer relations.