World Education, with a small grant from the U.S. Agency for International Development, began an experimental pilot project in nonformal education at a university research center, a pilot project that eventually became the Government of Nepal's national literacy program. The program evolved gradually over 12 years (1977-89) and was molded in response to local conditions and the needs of learners, facilitators, government officials, and private development organizations. Gradually, a strategy for linking literacy training to development emerged. This strategy includes a series of learning materials that cover a broad range of development issues, a set of learning activities and training methods characterized by participatory learning, and a process of individual and collective growth that make literacy an appropriate starting point for self-help community development. The staff of the literacy program was always open to learning from experience as well as from experts. Many options were tried and various processes were used to modify and change the design of the program elements. The interplay between the ideal proposed by the staff and the real reaction from learners produced a very effective literacy program. (Examples of learning materials and lesson plans as well as discussion of the underlying theories are presented in this report.) (KC)