A growing literature documents the myriad penalties for children of incarcerated fathers, but relatively little is known about how paternal incarceration contributes to educational outcomes in early and middle childhood. In this article, we use data from the Fragile Families and Child Wellbeing Study to provide the first estimates of the relationship between paternal incarceration and children's grade retention in elementary school. Propensity score matching models indicate that children of incarcerated fathers are more likely to experience early grade retention than their counterparts. This relationship is not driven by test scores or behavior problems; preliminary evidence suggests this relationship may be driven by teachers' perceptions of children's academic proficiency. These findings suggest that elementary school teachers may play an important role in the lives of children experiencing paternal incarceration and, more generally, highlight yet another way in which the large-scale incarceration of men limits their children's potential.