Education reforms that entail increased emphasis on high-stakes testing, assessment and grading have spread across education systems in recent decades. Critics have argued that these policies could have consequences for stress, identity, self-esteem and the overall health of pupils. However, these potentially negative consequences have rarely been investigated in a systematic and rigorous way. In this study we use a major education reform in Sweden, which introduced grades and increased the use of testing for pupils in the 6th and 7th school year (aged 12 to 13 years), to study the consequences of grading and assessment for health outcomes. Using data from the Health Behaviours of School-Aged Children Survey, we find that the reform increased school-related stress and reduced the academic self-esteem of pupils in the 7th school year. This, in turn, had an indirect effect on psychosomatic symptoms and life satisfaction for these pupils. Moreover, the negative effects of the reform were generally stronger for girls, thereby widening the already troubling gender differences in health. We conclude that accountability reforms aimed at increased use of testing, assessment and grading can potentially have negative side effects on pupils’ health.