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To the extent that students benefit from high-achieving peers, tracking will help strong students and hurt weak ones. However, all students may benefit if tracking allows teachers to better tailor their instruction level. Lower-achieving pupils are particularly likely to benefit from tracking when teachers have incentives to teach to the top of the distribution. We propose a simple model nesting these effects and test its implications in a randomized tracking experiment conducted with 121 primary schools in Kenya. While the direct effect of high-achieving peers is positive, tracking benefited lower-achieving pupils indirectly by allowing teachers to teach to their level. (JEL I21, J45, O15)