Gifted underachievers are children who display a discrepancy between expected high achievement and actual’ performance. Focussing on gifted children with a long-standing pattern of underachievement not explicable in terms of learning disability, this paper adopts a developmental perspective to the problem of gifted underachievement. Literature is reviewed on the affective development of gifted underachievers and the environmental factors which may foster or diminish success in school. It is argued that cognitive and affective variables do not operate independently and should not be considered in isolation from the environmental context of development. Further, gifted underachievers are not a homogeneous group, and some influences on achievement are situation-specific and highly variable. Finally, implications for intervention are discussed in light of the need to view children’s development not as a dichotomy of cognitive and affective change but holistically, as a complex interaction of child and environment.