This 3-year study, part of the Effective Schools Project of the Seattle School District and the University of Washington, was undertaken to investigate the relationship between teachers' perceptions of the principal as instructional leader and average gain scores of students in 67 elementary schools in Seattle. Scores were disaggregated by student ethnicity and student free lunch status as a surrogate measure of socioeconomic status (SES). Data pertaining to teacher perceptions of the principal as instructional leader were obtained through the Staff Assessment Questionnaire, and specific attention was given to four general aspects of principal behavior: (1) mobilizing resources, (2) communicating, (3) serving as instructional resource, and (4) being a visible presence. These data were then correlated with school means for aggregated student improvement on Total Reading and Total Mathematics of the California Achievement Test (CAT). Individual gains for students were computed and aggregated for four groups: white, black, free lunch, and non-free lunch. Regression analyses were used to assess the relationships between the leadership of the principal and other effective school characteristics, while analysis of variance was used to assess the effects of leadership on student gain scores. The findings of this study suggest that teachers' perceptions of the principal as instructional leader are critical to the reading and mathematics achievement of students, particularly among historically low-achieving groups of students. (TE)