If principals have the authority to dismiss teachers, will they dismiss the less effective ones, or will they instead make perverse decisions by letting the good teachers go? Evidence from low-stakes surveys suggests that principals are able to identify the most and least effective teachers in their schools, as measured by their impact on student achievement. On this topic, debate has been vigorous but research almost nil, in good part because teachers with tenure are not easily dismissed and principals take on that task only if they have a strong backbone or face an extremely urgent situation, or both. In some instances, however, principals have considerable latitude when it comes to dismissing teachers who have not been in service long enough to have earned tenure. By comparing the characteristics of dismissed versus nondismissed probationary teachers within the same school and year, the author was able to determine just how much weight school administrators place on a variety of teacher characteristics, including their performance in the classroom. He finds that principals in Chicago do exercise their authority in sensible ways. Principals are more likely to dismiss teachers who are frequently absent and who have previously received poor evaluations. The results suggest that other school districts could possibly improve student achievement if they adopted policies similar to those applied in Chicago. The analysis presented in this article uses the existence of the new policy, in conjunction with detailed data on teachers and principals, to provide descriptive evidence on the relationship between the exercise of dismissal authority and teacher effectiveness. (Contains 3 figures.)