The percentage of students repeating a school year is not homogeneous among European countries. In Portugal grade retention is a common practice. This article examines the determinants of grade retention and analyzes its impact on student performance in Portugal, presenting at the same time some results for a set of European countries. In Portugal, individual, family and peer characteristics are important factors explaining grade retention. In particular, students with less maturity and worse economic conditions are more likely to repeat. The effects of school retention are evaluated in the framework of a treatment effects model. Academic performance at a later stage of basic education is negatively affected by repeating at an early stage, which suggests that there will be advantage in implementing alternatives to support students. The short-term effects of repeating at a later stage are positive, although small. In this case, the results do not call into question grade retention.