Successful implementation of school-based management (SBM) begins with effective principal leadership. This paper describes findings of a study that examined the principal's role in implementing school-based decision making. Ethnographic data were collected over a 3-year period in 4 elementary schools that implemented SBM. Methods included observation and 66 formal interviews with principals, teachers, parents, and program facilitators. Findings indicate that a facilitative leadership style was most compatible with SBM. A facilitative principal shares decision-making responsibilities on issues related to school management and administration, encourages the development of leadership within the nonadministrative staff, and fosters a school climate of trust and efficacy. The principal also needs the support of some committed staff. Female principals tended to have greater success with facilitative leadership than did male principals, perhaps because women tend to utilize less hierarchical leadership styles. Another reason might be that subordinates perceive facilitative male leaders as weak. Three figures are included. (Contains 39 references.) (LMI)