Grade retention is one of the most discussed and controversial educational measures, and yet, it is still widely applied in many countries. Research investigating the effects of grade retention on students' psychosocial variables presents mixed findings, partly due to the variables assessed, methodological issues, and the length of the studies. This study aimed to analyse both the short to medium and longitudinal effects of grade retention in grades 7 or 8 on Portuguese students' academic self‐concept, self‐esteem, goal orientations, and school career. Data were collected continuously over a 3‐year span (once a year) and, again, 3 years after the third wave. After matching 477 students on several pretreatment variables using inverse probability treatment weighting with time‐varying treatments (i.e., retention), our analytical sample consisted of 85 promoted students, 33 students retained in grade 7, and 32 students retained in grade 8. Our results showed that retained students did not differ from their promoted peers in self‐esteem and goal orientations in the short, medium, or long term. The exception was for an increase in the academic self‐concept of retained students, but only in short term. Finally, considering students' school career, grade retention was not predictive of further retention.