Underachievement is a growing concern in education and, more recently, in academic programs for gifted and talented youth. In gifted and talented education programs, underachieving students are individuals who have tremendous potential but who are not performing up to that potential, even if they are meeting grade-level expectations. In this chapter, we discuss underachieving students using tenets of the talent development megamodel (TDMM; Subotnik et al., Psychological Science in the Public Interest 12:3–54, 2011). These tenets include (a) the complementary and contrasting roles of domain-general vs. domain-specific abilities in the talent development trajectory; (b) the notion that both domain-general and domain-specific abilities are malleable; (c) the fact that opportunities must be provided to individuals with potential, who must take up those opportunities; (d) the importance of psychosocial factors in the development of academic talent; and (e) the usefulness of insider knowledge in developing talent. We highlight psychosocial factors, which speak to the interaction of individuals and their contexts, as particularly salient in the context of underachieving gifted students and conclude with a call for researchers of underachievement in gifted contexts to consider psychosocial factors in their definitions of underachievement.