Purpose: The purpose of this paper is to explore the key determinants of effective school-based management (SBM) for improved teaching-learning environments and student achievements, while identifying the major reasons as to why poor implementation of SBM is associated with lower student achievements. Design/methodology/approach: Both dimensions of quantitative and qualitative research were applied for the purpose of this study with active participation of 334 school stakeholders, including principals, teachers, parents, and school council members. In addition to the survey, 33 Interviews and FGDs were conducted with the participation of 61 key informants. These were followed by an examination of school documents, including students' national examination results. Findings: This study concludes that SBM drives the emergence of decision-making authority of principals, the presence of participatory school decision-making, and high involvement of school council for better teaching and learning environments. In turn, effective implementation of SBM policy is associated with healthier teaching-learning environment and better student academic achievements. However, less effective implementation of SBM is due to lack of proper understanding of the school stakeholders that resulted in lower academic achievement. Practical implications: Adequate provisions of training on the part of school council members and school principals are required for significant results of SBM policy and programs for improved teaching-learning environment and increased student achievements. The training focuses on, among others: school leadership, school development planning and changing roles of school leaders under SBM reform. Originality/value: This study builds on global and Indonesian developments of the decentralized education through SBM model. This study is highly significant in addressing the current debates in existing literature about whether or not SBM has resulted in school improvements and higher student achievements. Practically, this study provides adequate insight to educational leaders, policy makers and international donor agencies in demonstrating why SBM is effective in particular school settings as well as why SBM policy and programs are not effectively implemented in other schools that resulted in lower student achievements.