This paper describes a study that consisted of interviews with 38 elementary school principals in 21 Western and Midwestern states. The sample was made up of 27 men and 11 women with an age range of 35 to 64, all of whom worked in small-town schools. The paper describes the various challenges faced by these principals, including academic deficits, children's emotional needs, public demands for higher achievement, decreasing financial resources, and staff improvement needs. Specific case descriptions are offered to illustrate current realities and some exemplary practices for boosting student motivation, teacher improvement, and increasing staff involvement. Some outstanding programs described include: (1) a cooperative approach among administrators, teachers, parents, and students to improve classroom discipline; (2) a home-centered parent education program; (3) low-cost teacher inservice training; (4) teacher peer coaching; and (5) a staff decision-clarification procedure. It is concluded that too many principals continue to work ineffectively in the face of the frustrations to be found in rural schools. A small number of administrators, however, are able to cope successfully with their challenges by using more innovative and democratic approaches to leadership. (TES)