In this article, we address the relationship between teacher expectation bias and student characteristics, its effect on long-term student performance, and the development of this effect over time. Expectation bias was defined as the difference between observed and predicted teacher expectation. These predicted expectations were estimated from a multilevel model in which teacher expectations of students' future performance in secondary education were regressed on students' prior achievement, IQ, and achievement motivation. Multilevel analyses were performed on a data set of about 11,000 students who entered secondary school in 1999 and who were monitored for 5 years. We found relationships between teacher expectation bias and student characteristics as well as a clear effect of expectation bias on long-term student performance. Teacher expectation bias partly mediated the effects of student characteristics on students' performance. Moreover, its effect was moderated by some of these characteristics. Mediation and moderation effects were the strongest for parents' aspirations. The effects of teacher expectation bias dissipated partly during the first 2 years but afterwards remained stable over time.