This paper presents the findings from an evaluation research project undertaken by Henley Management College in 2006. This project followed an earlier research study that focused on identifying the leadership development needs for leaders of small and medium sized-enterprises (SMEs) in the UK, developed a leadership development model and made recommendations for a leadership development programme. The principle challenges facing the SME organisations overwhelmingly concerned leading change in their organisation. Their personal challenges concerned implementing change initiatives, communicating these and motivating the people in their organisation. In consideration of the challenges identified, one of the key recommendations was to pilot an action learning programme and evaluate the effectiveness of action learning to develop leadership skills in SME leaders. Henley Management College then conducted a research project to evaluate the pilot programme. This pilot consisted of three learning sets, run in three geographical areas in the UK and facilitated using three very different styles. Following the pilot programme, there were several wider reviews by academics, advisors and representatives of relevant government boards. This has since resulted in a significant programme of action learning for SME leadership development being implemented. This paper provides an overview of the relevant literature and research methodology and then presents the evaluation results from the pilot programme. The dominant theme was that action learning does indeed deliver significant business benefits and provides a real opportunity for SME leaders to develop their leadership skills. (Contains 6 tables and 3 figures.)