The negative impact of school absenteeism on children’s academic performance has been documented in the educational literature, yet few studies have used validated development indicators, or investigated individual and neighborhood characteristics to illuminate potential moderating factors. Using cross-sectional Early Development Instrument (EDI) panel data (2001–2005) we constructed multilevel linear and logistic regression models to examine the association between school absenteeism and early childhood development, moderated by Aboriginal status, length of school absence, neighborhood-level income inequality, and children’s sex assigned at birth. Our study included 3572 children aged four to eight in 56 residential neighborhoods in Saskatoon, Canada. Results indicated that Aboriginal children missing an average number of school days (3.63 days) had significantly lower EDI scores compared to non-Aboriginal children, controlling for individual and neighborhood factors. As school absenteeism lengthened, the gap in EDI scores between Aboriginal and non-Aboriginal children narrowed, becoming non-significant for absences greater than two weeks. Children with long-term school absence (>4 weeks of school), living in neighborhoods of low income inequality, had significantly better physical and social development scores compared to children from medium or high income inequality neighborhoods. Across all EDI domains, girls living in neighborhoods with low income inequality had significantly better EDI scores than boys in similar neighborhoods; however, sex-differences in EDI scores were not apparent for children residing in high income inequality neighborhoods. Results add to the literature by demonstrating differences in the relationship between school absenteeism and early developmental outcomes moderated by Aboriginal status, length of school absence, neighborhood income inequality, and sex assigned at birth. These moderating factors show that differential approaches are necessary when implementing policies and programs aimed at improving school attendance.