Participation in organized extracurricular activities (EAs) is becoming increasingly prevalent among young children in China and worldwide. As an important microsystem of child development, EA involvement is likely to interact with other microsystems in relation to child outcomes. The current study focused on the interaction between EA participation and the quality of preschool education, specifically the quality of teacher–child interactions, in relation to children's academic readiness. This study included 443 Chinese preschoolers (M = 5.08 years) from 49 preschool classrooms. Parents reported children's EA participation. Preschool teacher–child interactions were assessed using the Classroom Assessment Scoring System. Children's academic readiness was measured using one-on-one tasks. The results showed that although EA participation was not related to child academic readiness, the quality of preschool teacher–child interactions (i.e., emotional support and instructional support) moderated the association between EA participation and children's academic readiness (the slope variance reduction was between 12.7% and 17.5%). Specifically, the significant associations found suggest that EA participation could have a small compensatory effect on academic readiness for children experiencing very low emotional support in preschool; however, EA participation had a small negative association with academic readiness when children were already exposed to high emotional or instructional support in preschool. The findings highlight that EA involvement may not always produce beneficial outcomes in young children and that exposing children to high-quality classroom interactions in preschool is a key to fostering positive development.