The Hong Kong Government first introduced school-based management (SBM) to the education profession in 1991. The principal is a pivotal factor in fostering an environment for change. SBM and teacher empowerment calls for new modes of leadership: teachers lend their expertise, and principals become facilitators rather than directors. The purpose of the study as reported on the research paper was to examine the principals' perceptions and understanding of teacher empowerment. Secondly, it was also aimed at looking for the essential conditions at the administrator level which are necessary for teacher empowerment. A questionnaire survey was adopted to collect the required data. The principals' perceptions were assessed through a written survey consisting of 34 statements of which 14 statements concerning SBM, the empowerment of teachers, and the relationships between SBM and empowerment. The other 20 statements were set to tape the respondents' opinion on their work and working environment. As supported by the survey findings, the responding principals were characterized by their open-mindedness and acceptance towards SBM in a general sense. Though the respondents had a good knowledge of SBM, they held a less confident attitude towards teachers' role in decision making. With regard to the essential conditions for empowerment at the administrator level, the findings are also rather positive. It is highly recommended that practitioners should make use of those favorable conditions when turning the concept of teacher empowerment into practice. (Contains 10 tables, 24 references, and 1 appendix.)