This mixed-method study examines Arizona principals' capacity-building skills and practices in Tier III schools aimed at developing potential for sustained improvements in student outcomes. Data sources included surveys (62 individuals) and semistructured interviews (29 individuals) of principals and staff (e.g. teachers, instructional coaches, assistant principals) who participated in grant-funded leadership training over an 18-month period. The theoretical framework consisted of leadership in the sociocultural dimension (Ylimaki et al. in" Leadersh Policy Sch" 11(2):168-193, 2012) and capacity building for sustainable improvement in high-capacity Schools (Mitchell and Sackney in "Sustainable improvement: building learning communities that endure." Sense Publishers, Rotterdam, 2009). Findings indicated that: (1) schools were not at high-levels of capacity building; (2) those schools in process of building capacity for sustainable improvement demonstrate a directive leadership approach; (3) school development towards high capacity focused on micro-level processes (e.g., professional learning communities); and (4) little attention was given to leadership in the socio-cultural dimension. Implications of the study suggest future research test a leadership development model for Tier III schools that links capacity building leadership and student achievement. The next generation of educational leaders must also have the knowledge, skills, dispositions, and analytical tools to lead schools in both the accountability culture and the macro socio-cultural dimension.