The purpose of this study was to investigate factors that contribute to individual differences in the school performance of 2nd-grade children born to adolescent mothers. The sample of this study was 90 low-income adolescent mothers and their children. Data were collected from the adolescent mothers and their first-born children, now in 2nd grade, by interviewing the mothers and assessing the children at home and in the classroom. The paraprofessional family advocates who provided services to the families also assessed the parenting practices of the adolescent mothers. The children's school performance in 2nd grade relative to their peers was rated by their teachers at the end of the year in three different areas: social adjustment, academic performance, and academic motivation. Results showed that early home environment and parenting skills predicted children's social adjustment at the end of 2nd grade, and the relation was mediated by receptive vocabulary at 54 months, academic performance at the beginning of school entry, and social adjustment in 1st grade. Similar results were obtained when academic achievement and academic motivation were the outcomes of interest. Children who lived in a more supportive home environment during the preschool years were more competent prior to school entry, which in turn, predicted school performance in 1st and 2nd grade.