Findings from the recent OECD PISA studies highlight the need for the Hungarian school system to improve both effectiveness and equality. Hungarian 15-year-old students scored somewhat below or around the OECD average in the areas of reading, mathematical, and scientific literacy. In addition, students differ less in academic achievement within the school than they do among different schools, a finding echoed in the analysis of national student assessment data covering the sixth, eighth, and tenth grades. While the achievement gaps among schools put the Hungarian system as one of the most unequal among forty-some countries participating in the PISA studies, such gaps seem to largely mirror the differences in socio-economic backgrounds of students. In this paper, the authors further explore the issue of equality of learning outcomes in Hungary by examining the effects of tracking in secondary schools. On the basis of analyzing the PISA 2003 data, they show that the dramatic disparities in students' learning outcomes exist among different tracks which, to a great extent, can be explained by a measure of the socio-economic status (SES) of students' family background, as well as the aggregate SES characteristics of student intake at the school level. They find that, while high-SES schools overall have higher levels of test scores, they also tend to have better resources. Moreover they suggest that this system not only makes high inequality but its "low end" vocational training schools put forward a not-so-bright future as the effectiveness issue is concerned. (Contains 3 tables, 1 figure and 5 notes.)