A recent report by the Mathematics Advisory Panel referred to algebra as a "gateway" to later achievement (National Mathematics Advisory Panel, 2008). To address the problem of low academic performance in algebra, an increasing number of states and districts have started to implement a policy of requiring algebra for all students in ninth-grade or earlier. The rationale is that providing all students with an opportunity to learn algebra will likely improve math achievement across the board. However, the well-intended curricular policy may have unintended consequences for some students if the change of curricular offerings leads to a reorganization of all math classrooms in a school. To explain the negative effects of the policy that required algebra for all 9th grade students in Chicago Public Schools, the authors' causal questions focus on the mediating role of changes in peer ability composition induced by the policy. Specifically, the authors address the following research questions: (1) Did change in peer ability mediate the policy effects on student outcomes? (2) What would be the direct effects of the policy on student outcomes if schools did not change class composition? (3) Did the mediated effects (i.e., indirect effects) and the direct effects of the policy depend on the direction of change in peer ability for individual students? The analysis of pre-policy course-taking has shown that almost all 9th graders whose incoming math skills were higher than 0.5 standard deviations above the overall average took algebra in the absence of the policy. Hence the policy would not change these students' algebra enrollment. However, the results indicated that these same students would have experienced a decline in peer ability on average had they instead entered high school after 1997. Among students whose incoming math skills were no more than 0.5 standard deviations above the overall average, those who were more likely to take remedial math prior to the policy showed a higher likelihood of experiencing an increase in peer ability along with a change in course taking had they instead entered high school after 1997. The authors are currently conducting mediation analysis. References, and Tables and Figures are appended. (Contains 1 figure and 1 table.)