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This study examines how peer racial composition—measured at the student level as same‑race exposure and overall school diversity—relates to academic achievement in U.S. elementary schools. Using data from the Early Childhood Longitudinal Study, Kindergarten Class of 2011, I follow students from kindergarten through second grade and estimate models with student fixed effects to account for time‑invariant unobserved differences. Results show that greater same‑race exposure is slightly negatively associated with reading achievement, while greater diversity is positively associated. Interaction models indicate that diversity mitigates potential disadvantages of high same‑race exposure. Subgroup analyses reveal that Black students experience negative associations with same‑race representation but benefit from diverse schools. These findings highlight the academic value of racially diverse peer environments in early elementary education.