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The paper presents a critical review of the research on the intersection of data use and ability grouping. This topic is significant in light of research suggesting that the use of data in the current accountability context may be increasing ability grouping. Drawing on a novel conceptual framework rooted in theories of sensemaking and social construction, our review reveals that data use can be a powerful tool to push teachers to challenge their assumptions and reflect on their instructional practices. Data use can also foster inequity and perpetuate assumptions about ability. The type of assessment also influences grouping decisions. Groups range from fixed to dynamic and flexible. Context and meaning-making processes play pivotal roles in instructional decisions.