A sample of 784 children with below-median literacy performance in kindergarten or at the beginning of grade 1 was assessed in 5 areas of psychological and social variables: academic competence, sociodemographic characteristics, social/emotional/behavioral characteristics, school context, and home environment. We examined the contribution of academic competence to retention first and then evaluated contributions of each of the other areas beyond academic competence. The 165 students retained in first grade were found to differ from promoted students on reading and mathematics achievement test scores, teacher-rated engagement and achievement, and intelligence as individual predictors of academic competence, but with direct effects only for reading and teacher-rated achievement when entered as a set of predictors. Nine additional variables had zero-order significant correlations with retention status. Using hierarchical logistic regression, beyond the effects of academic competence variables we found that only being underage for grade and the home environmental variables of positive parental perceptions of their child's school, sense of shared responsibility for education with the school, and parent communication with the school contributed significantly to retention. Implications for educational policy and intervention are discussed. (Contains 2 tables.)