Empirical studies have demonstrated that students who are taught in a group of students with higher average achievement benefit in terms of their achievement. However, there is also evidence showing that being surrounded by high-achieving students has a negative effect on students’ academic self-concept, also known as the big-fish–little-pond effect. In view of the reciprocal relationship between achievement and academic self-concept, the present study aims to scrutinize how the average achievement of a class affects students’ achievement and academic self-concept, and how that, in turn, affects subsequent achievement and academic self-concept. Using a sample of 6,463 seventh-graders from 285 classes in Germany, multilevel path models showed that the class-average achievement at the beginning of the school year positively affected individual achievement in the middle and at the end of the school year, and negative effects on academic self-concept occurred only at the beginning of Grade 7, but not later in the school year. In addition, mediation analyses revealed that the effects of class-average achievement on students’ achievement and academic self-concept at the end of the school year were mediated by midterm achievement, but not by midterm academic self-concept. This pattern was found for mathematics, biology, physics, and English as a foreign language. The results of our study indicate that the consequences for students of belonging to a group of high-achieving students should be analyzed with respect to both academic self-concept and achievement.