Liberal arts colleges occupy a unique place in the landscape of higher education. Whether defined, as David Breneman has, as an exclusive group of about 200 schools that award a large percentage of their degrees in traditional liberal arts fields, or as a more inclusive group of baccalaureate institutions, liberal arts colleges focus on undergraduate education and offer a highly personalized approach to teaching and learning. Their classes are an ideal forum for developing students' analytic, writing, speaking, and critical thinking skills. More than any other type of school, liberal arts colleges provide their students with opportunities to engage in independent study and collaborative research with faculty. These institutions seek nothing less than to prepare students for extraordinary lives that will make significant contributions to the larger society. And, the results are impressive--inordinately large numbers of liberal arts graduates go on to pursue graduate degrees, make impressive contributions in the arts and the sciences, and become leaders in business, government, and non-profit organizations. This turbulent environment raises many issues for small colleges. This article focuses on just four specific challenges that are central to the character and survival of liberal arts colleges: the need to craft a distinctive and compelling institutional identity, how small colleges might derive more advantages from their size and residential character, the changing roles and expectations of faculty members, and the financial challenges facing small colleges.