This paper studies regional differences in students’ educational performance and inequality in Portugal. Despite the centralized nature of the Portuguese educational system, there are significant differences across regions. We consider firstly the role of school and family factors. Results suggest that individual and family backgrounds play an important role in explaining both achievement and inequality. School characteristics are also important but only in terms of performance, while the role of “pure” regional effects is limited. From a policy perspective there is scope for school intervention, namely regarding school organization and teachers’ responsibilities. Nevertheless, to target educational inequality, educational policy needs to take into account the school-family-community context and should not focus exclusively on schools.