This report, part of the Challenge to Lead education goals series, documents graduation rate performance in SREB states. It looks at recent graduation rate increases and the narrowing gap between the regional and national rates. Nearly all SREB states have shown increases -- many leading the national rate of growth. The report shows how black and Hispanic students graduate at rates similar to their peers nationwide but trail white students by large margins. Males--especially black males--trail females by wide margins as well. Milestones and Guideposts also identifies a series of measures that states can use to pinpoint problem areas in the high school pipeline, such as how well students transition from the middle grades to high school, how timely they progress through high school, and whether they actually graduate at the end of their senior year. This report shows that despite some positive developments, much more work is needed, especially in the region's most troubled high schools. Milestones and Guideposts is a companion to "The Next Generation of School Accountability: A Blueprint for Raising High School Achievement and Graduation Rates in SREB States." Appended are: (1) Historical Averaged Freshman Graduation Rates in SREB States, 1996 to 2006; and (2) High School Graduation Rates in SREB States for Black, Hispanic and White Students, 2006. (Contains 6 figures, 4 tables, and 5 boxes.)