Drawing on information from 15 sources, this literature review discusses advantages/disadvantages of small schools and summarizes practices for both rural and urban small schools to follow to maintain educational quality despite dwindling enrollments and resources. Small school disadvantages in the areas of staff, instructional program, and materials are noted. Aspects of instruction, interaction, and parent/community involvement cited as small school strengths include favorable student/teacher ratios, learner-centered environment, innovative methods (individualization, independent study), higher levels of learning, teacher knowledge of individual student needs and strengths, more student/teacher and student/student interaction, family atmosphere, cross-age grouping, good teacher/administrator relationships, participative management, cooperation with other schools to maximize resources, good relationship with the community, community and volunteer involvement, parent approval of small schools, good parent/teacher relationships, and financial support from parents and community. Instructional techniques recommended for small schools are individualized instruction, independent study, experiential learning, and parent participation in learning. Student groupings found especially effective for small schools are nongraded classrooms, cross-age grouping, and peer teaching and tutoring. Suggested cooperative strategies include team teaching, peer observation to improve teaching, cooperative planning, shared resources, and links with other districts to provide instructional materials, inservice, special programs, and curriculum development. (NEC)