Recent research offers strong evidence that reduced class size has positive effects on improved student achievement, teachers' work conditions, and the quality of the classroom environment. This report presents a brief historical perspective on the research into the effects of class size; summarizes studies that discuss the relationship between smaller classes and student achievement; and presents research evidence concerning the effects of class size on the educational environment, including such psychological factors as attitudes, motivation, and morale. Summaries provide additional insights, implications, and research highlights, and indicate the need for longitudinal studies on class size in conjunction with such other variables as subject matter and instructional design. Twenty-six references are appended. (IW)