Despite the accumulated evidence that retention is an ineffective and potentially harmful remedial strategy, several countries struggle with high levels of retention in compulsory schooling. This article provides evidence of the impact of the Portuguese national educational policy "Programa Mais Sucesso Escolar" (PMSE) using class size, class composition, and differentiated instruction to reduce student retention and increase achievement. We found that PMSE significantly reduced retention, but had mixed effects on educational achievement, pointing to evidence of grade inflation on teacher-determined measures of achievement. In the discussion, we analyze the implications of these results for policy, practice, and program evaluation research.