Are middle schools ill-suited for early adolescents, or can school characteristics account for any differences in student functioning? Achievement, school engagement, and perceived competence of children starting middle schools in 5th and 6th grades were compared to those of their same-grade peers in elementary schools in a national, longitudinal sample (NICHD Study of Early Child Care and Youth Development, n = 855; 52% Female, 82% White). Classroom quality (observed and teacher-reported) and school characteristics (composition and size) were considered as explanations for any relationships between school-level and student functioning. Fifth grade middle school students did not differ from those in elementary school, but students entering middle school in 6th grade, compared to those in elementary school, experienced lower classroom quality, which in turn predicted slightly lower achievement. They also had lower school engagement, explained by larger school size. Classroom quality and school characteristics predicted youth functioning regardless of school type. We suggest reshaping the research and policy debate with renewed focus on classroom quality and school size instead of grade organization.