This paper presents an expanded definition of school readiness that includes the skills children possess as they begin formal school as well as the ways that family backgrounds, preschool experiences, and primary-grade classrooms interact with children to point them toward school success or failure. The paper notes five dimensions of school readiness as put forth by the Resource Group on School Readiness of the National Education Goals Panel: physical well-being, emotional maturity, social confidence, language richness, and general knowledge. The paper asserts that a well-informed approach to improving children's school readiness must deal with three core questions: (1) What are the competencies that children bring with them to school? (2) How do early educational environments shape these competencies and how can we improve the competencies children bring to school? and (3) How do kindergartens and first grades respond to and build upon these competencies? Discussion of the competencies children need and the extent to which they have such capabilities at school entry focuses on literacy and language, and social and self-regulatory competencies. Characteristics of early educational environments shown to facilitate growth in these important competencies for school success are described as they relate to home experience; participation in high-quality prekindergarten programs, especially for poor children; and child-teacher interactions. The lack of consensus about how to deliver instruction in early education settings is also noted. Discussion of the impact on schools and classrooms on young children's competence focuses on providing access to instruction, providing the right kinds of instruction to all children, customizing the kindergarten classroom, and school readiness in the next decade. (Contains 41 references.) (KB)