Five teams of researchers observed literacy instruction in 28 first-grade classrooms in diverse settings across five states. At each site, they observed teachers who had been identified by administrators as outstanding or typical, and they noted how each teacher taught and the literacy achievements of the students in each class. Based on student academic engagement and classroom literacy performances, the most effective and least effective teachers in each locale were selected and their instruction further analyzed. The classrooms of the most effective teachers were characterized by high academic engagement, excellent classroom management, positive reinforcement and cooperation, explicit teaching of skills, an emphasis on literature, much reading and writing, matching of task demands to student competence, encouragement of student self-regulation, and strong cross-curricular connections. The lowest achieving students in these classrooms outperformed their peers in more typical classrooms on several measures. (Contains 54 references and 3 tables of data; appendixes contain a description of research personnel responsibilities, and a list of characteristics that differentiate the most-effective-for-locale classrooms.) (Author/RS)