Children from low socioeconomic status (SES) backgrounds often have more negative self-views than their peers. How are these self-views shaped by teacher-student interactions in the classroom, and what are the consequences of these self-views for achievement inequality? We present a developmental framework addressing these questions by bridging insights from the psychological, educational, and sociological literatures. We show that children from low-SES backgrounds perceive themselves as less intelligent, less able to grow their intelligence, less deserving, and less worthy, independent of their actual abilities and achievements. We demonstrate how negative intellectual stereotypes--expressed through daily interactions with teachers in classrooms, such as teachers' expectations, feedback, and attention--undercut the self-views of children from low-SES backgrounds. We also show how this process can be exacerbated by institutional and cultural values reflecting a belief in meritocracy (e.g., schools that encourage competition, emphasize raw ability, and attribute achievement inequality to intrinsic factors), which are common in countries with high income inequality and rigid between-school tracking. The ensuing more negative self-views introduce psychological barriers that undermine the academic achievement of children from low-SES backgrounds, thereby reinforcing achievement inequality. This represents an enormous loss of potential and perpetuates harm into adulthood. Socioeconomic disparities in self-views can emerge early in life and widen with age, underlining the need for developmental research and timely intervention. We discuss implications for studying the nature, origins, and consequences of socioeconomic disparities in self-views, and for designing interventions to reduce achievement inequality.