The study identified the perceptions of American Indian and non-Indian teachers of Indian students in order to determine the effect of their perceptions on the reading achievement of Indian first-grade students. Subjects were 4 female teachers of 72 Indian first-grade students enrolled in Federal elementary schools located in North Central Mississippi and operated by the Bureau of Indian Affairs, Choctaw Agency, Philadelphia, Mississippi. During the first week of September 1976, the students were given the Metropolitan Readiness Test to determine their initial reading readiness. At this time, the Adjective Check List was administered to the teachers to determine their perception of the students. For 25 weeks, the students were taught using the same instructional programs. After the 25 weeks, the students were administered the Metropolitan Achievement Test. Data were analyzed using three statistical models: analysis of variance of perceptions, analysis of covariance of reading achievement, and multiple regression analysis of correlation between perceptions and reading achievement. In all cases, raw score data and a difference was considered significant at the .05 level. Findings indicated that: Indian teachers' perceptions of Indian students were more positive than non-Indian teachers' perception; no significant differnece existed between the reading achievement of Indian first grade students taught by Indian or non-Indian teachers; there was a significant correlation between teacher perception and reading achievement. (NQ)