Recent research has suggested that the principal's role in the effectiveness of schools is far more important than had been believed earlier. What the principal's role typically is, what it ideally should be, and how it can be changed are the topics of this report. The first two chapters survey (1) the research on characteristics of principals of effective schools, and (2) studies of the actual circumstances faced by principals, revealing the demands that restrict principals' concentration on instructional leadership. The third chapter presents several techniques for exerting instructional leadership, including methods of working with personnel and improving school climate. Administrative skills valuable to principals are discussed next, since they affect the principal's efficiency and the school's sense of mission and effectiveness. The roles of the district superintendent and the school board in supporting the principal's efforts are treated in the fifth chapter. The three subsequent chapters cover the selection, inservice training, and evaluation of principals, all factors critical to developing effective leadership. The ninth and final chapter suggests methods for coping with principals' job stress. Checklists and sample forms selected from the literature, and data from surveys conducted for this report, are presented throughout the document. (PGD)