This paper presents findings from an action-research study of 12 New Zealand primary school principals working in partnership to develop their professional leadership. Since 1989, New Zealand schools have undergone extensive administrative reforms, resulting in increasing isolation among school leaders and a cult of managerialism. The action-research study sought to develop a theory of professional development for school leaders generally and to help the 12 principals understand and change their situations. The research design was based on the underlying principal of praxis. The principals observed each others' practices in their respective schools, gave feedback, conducted reflective interviews, and collaborated in planning and implementing action plans. Findings indicate that peer-assisted leadership development helped principals focus on their professional and school-development goals, reduced their feelings of isolation, and facilitated reflective thinking that led to proactive, transformative action and a realization of the wider picture of principals' practice in New Zealand. The program gave principals a feeling of united strength to deal with problems at regional and national levels. One peer relationship is described in detail to illustrate how reciprocal support developed into emancipatory actions at the school and national level. Contains 18 references and 1 figure. (LMI)