The issue of whether the social class of grandparents affects grandchildren’s socioeconomic outcomes net of the characteristics of the middle generation is much debated in the social mobility literature. Using data from the 2002 Chinese Household Income Project, we investigate the direct effects of grandparents on grandchildren’s educational attainment in rural China. We find that the influence of grandparents is contingent on living arrangements. Although the educational level of coresident grandparents directly affects the educational attainment of their grandchildren, with an effect size similar to that of parental education, the education of noncoresident and deceased grandparents does not have any effect. These findings suggest that grandparents can directly affect grandchildren’s educational outcomes through sociopsychological pathways. Our study not only adds an important case study to the literature but also sheds new light on theoretical interpretations of grandparent effects when they are found.