Experts claim that individual differences in children's formal understanding of mathematical equivalence have consequences for mathematics achievement; however, evidence is lacking. A prospective, longitudinal study was conducted with a diverse sample of 112 children from a midsized city in the Midwestern United States (Mage [second grade] = 8:1). As hypothesized, understanding of mathematical equivalence in second grade predicted mathematics achievement in third grade, even after controlling for second‐grade mathematics achievement, IQ, gender, and socioeconomic status. Most children exhibited poor understanding of mathematical equivalence, but results provide clues about which children are on the path to constructing an understanding and which may need extra support to overcome their misconceptions. Findings suggest that mathematical equivalence may deserve more attention from educators.