The physical characteristics of a child's learning environment can affect health, wellbeing and educational progress. Here we investigate the effect of classroom setting on academic progress in 7-10-year-old students comparing reading development in "open-plan" (multiple class groups located within one physical space) and "enclosed-plan" (one class group per space) environments. All learning conditions (class group, teaching personnel, etc.) were held constant throughout, while physical environment was alternated term-by-term using a portable, sound-treated dividing wall. One hundred and ninety-six students underwent academic, cognitive and auditory assessment at baseline and 146 of these were available for repeat assessment at the completion of 3 school terms, allowing within-child changes across an academic year to be calculated. Reading fluency development (change in words read-per-minute) was greater for the enclosed-classroom phases (P < 0.001; 95%CI 3.7, 10.0) and the children who showed the greatest condition difference (i.e. slower rate of development in the open-plan) were those with the worst speech perception in noise and/or poorest attention skills. These findings highlight the important role classroom setting plays in the academic development of young students.