Guidance is provided for state Chapter 2 coordinators and evaluators in designing and implementing the congressionally mandated evaluation of the effectiveness of the Chapter 2 program. The first part of this paper reviews the congressional mandate and discusses the appropriate audience for evaluation reports. A schedule is outlined for conducting reporting and evaluation over 3 years. A framework is given for an evaluation design that includes a typology of Chapter 2-funded activities and a model of how these activities influence the educational system and student learning. Operational suggestions for staffing and funding are offered. The second part of this paper uses the typology found in the first part to discuss the evaluation of different types of activities, with emphasis on design, data collection, and data analysis. The third part provides more detailed guidance on specific design issues and discusses: (1) sampling strategies; (2) survey design and analysis; and (3) case studies. Seventeen tables, 8 figures, and a 10-item selected bibliography are included. (SLD)