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This study examined how perceived motivational climate in physical education is related to (a) perceptions of teachers’ differential treatment toward high and low achievers, (b) reported motivation and anxiety of children with high and low perceived competence during play or exercise with high- or low-ability children. One thousand three hundred ninety-three high school students completed measures of the above variables. The perception of teacher’s differential treatment was positively related to the perception of an environment emphasizing social comparison and negatively related to the perception of a climate emphasizing personal progress. Perceived competence had no effect on intrinsic motivation when extremely high learning goals were adopted. When low learning goals were adopted, motivation decreased for children with low perceived ability playing with high achievers and for children with high …