In the late 1980s and 1990s, states began working to decrease the level of regulation of public education, using a variety of approaches to regulatory flexibility. This paper examines the evolution of deregulation, from limited waiver programs to charter-school plans and new performance-based accountability systems that include broad-scale deregulation. Data were collected through telephone surveys and personal interviews with central office staff, building administrators, and teachers in South Carolina, Washington, and Texas. A survey of 50 state deputy commissioners of education was also conducted. Findings indicate that only certain schools were eligible for regulatory exemption. Schools attained eligibility as a reward for high achievement, through a competitive selection process, and/or because they survived detailed changes in plan/application processes. Waivers were restricted to certain types of regulations, and statutes were eligible for waivers only with the express sanction of the legislature. Each of the waiver programs was associated with some promising changes in schools. However, the role of deregulation is difficult to sort out from other variables. One of the most important effects of deregulation for school-level respondents was the removal of regulation as an excuse for traditional practice. Barriers to deregulation included lack of outcome measures, politics, equity concerns, and nonregulatory constraints. Persistent problems of state policy included the "bad apple mentality," constituency politics, and "the limited toolbox." Recommendations include: (1) view deregulation as one of many policy approaches; (2) develop accountability and incentive structures to promote continual progress; (3) develop criteria for the rationing of regulations; (4) develop a broader toolbox of policy approaches; (5) create new approaches to help problem schools; and (6) study the political, technical, and ethical issues that influence regulation. The appendix contains the interview protocol. Contains 35 references. (LMI)