Little is known about how grandmothers may influence children's development, although they may frequently assist parents in the raising of their children, especially among low-income families. Data from Welfare, Children, and Families: A Three-City Study were used to explore how preschoolers function academically and psychologically over time based on grandmothers' residential status and level of caretaking responsibility. Longitudinal regression analyses suggest that children who consistently have custodial grandmothers lag behind their peers in the development of their academic achievement, whereas those in multigenerational households consistently have more socioemotional problems over time. However, many of these differences are accounted for by co-occurring family characteristics. Furthermore, children transitioning into the care of custodial grandmothers were found to have positive changes in self-regulation and socioemotional functioning, and those transitioning into multigenerational households had more problems with self-regulation over time. (Contains 7 tables and 9 footnotes.)