To guarantee an efficient educational system, effective evaluation and supervision of teacher performance are necessary. However, the evaluation of teacher performance presents two major problems: first, no clear definition or measure of effective teaching exists, and second, evaluation is perceived to have conflicting purposes, either as a stimulus to teacher improvement or as a basis for advancement, retention, or dismissal. Accordingly, this paper reviews contemporary issues that bear on teacher evaluation, recommends evaluation procedures, and provides guidelines for effective instructional leadership. After an opening discussion of issues, such as the demand for accountability and the access/quality dichotomy in education, the four conventional approaches to evaluation are reviewed: (1) evaluation by "good traits," (2) evaluation based on skills and competencies, (3) product (outcome-based) evaluation, and (4) the service-contributions approach. Because all these are inadequate, a threefold evaluation procedure is recommended: (1) conferring with the teacher to establish goals, (2) devising an implementation strategy, and (3) ascertaining that the goals have been achieved. Clinical supervision is then discussed as a preferable alternative to in-class supervision, and due process requirements for fair evaluations are delineated. Characteristics of an effective principal are discussed next, followed by a summary of reasons for staff appraisal. The author concludes that strong instructional leadership by the principal, including supervision and evaluation, is the key to an effective school. A 47-item bibliography is included. (TE)