Increasing evidence from observational studies indicates that students attending minority segregated schools are at risk for constrained performance in reading. However, analyses of data gathered under observational conditions may yield biased results. Using data from the Early Childhood Longitudinal Study, 1998–1999 Kindergarten Cohort, this study used propensity score matching to address selection bias due to students’ observed socio-economic, literacy, and social-emotional background characteristics, allowing for a less biased estimate of minority segregated schooling on African-American, Latino, and European-American students’ reading gains in first grade. We found that African-American students attending segregated schools made less gain in reading across the first grade year than African-American students in non-segregated schools. There was no evidence for significant negative effects of segregation on reading gains for Latino and European-American students.