The present article investigates the relationship between the degree of tracking and inequalities in reading literacy of second-generation and non-immigrant students in 28 Western countries. The article takes into account that next to between-school tracking, there are also more subtle forms of tracking, such as tracking within schools or classes. By elaborating how the distinct mechanisms of different tracking characteristics generate achievement inequalities, I assume that any negative effects of tracking on second-generation immigrant students' achievements are primarily driven by differences in the quality of school environments. Data from the Programme for International Student Assessment 2018 are used and multilevel regression analysis with country-fixed effects are applied. The findings reveal that a higher tracking degree is related to substantial disadvantages in reading literacy for immigrant children. Furthermore, a higher immigrant concentration in schools is associated with immigrant inequalities in reading performance as the degree of tracking increases, whereas unequal distributions of teacher and instructional quality were found to generate inequalities in countries with less tracking. Even though the results are only partly in line with the theory of tracking influences on immigrant achievement disadvantages, they suggest that the interplay between institutional tracking and school characteristics are crucial for learning inequalities.