To enhance the cost effectiveness of primary schools, the government of Hong Kong imposed a regulation for operating primary one classes up to a minimum enrolment rate in 2003. This policy has forced a number of village schools to cease operation. During 2005-2006, 36 of them were involved in this enforcement, accounting for two-thirds of the total number of such schools, causing a possible extinction of them. This paper is part of a research project with the purpose of tracing the history and development of village schools in Hong Kong since the 1930s and 1940s. Adapting Bourdieu's concepts of habitus, capital and field, this paper examined the village school context of Hong Kong from a socio-historical perspective and examined how the context was related to leadership characteristics of village school principals. Related issues were also discussed. It is hoped that the study has suggested a direction for understanding principal leadership within different school contexts. (Contains 5 tables.)