This paper begins by describing the basic design and scope of Tennessee's Student Teacher Achievement Ratio (Project STAR), which began in 1985. The project was designed to determine the effect of reduced class size on the achievement and development of students in kindergarten through grade three. Findings that demonstrated that students in smaller classes had statistically significant achievement advantages over students in regular classes are discussed. The second part of the paper describes the Lasting Benefits Study (LBS), which addressed the question of what happened when the pupils who benefitted from the smaller class sizes returned in the fourth grade to regular classes. Study findings indicated that positive effects from involvement in a small-size class still remained pervasive two full years after students returned to regular-size classes. The third section of the paper describes Project CHALLENGE, which put into practice the results of Project STAR by reducing the class size in grades K-3 in 17 Tennessee districts to approximately 1:15. Data on students in the project shows that from 1989-90 to 1990-91, they moved up 5.3 ranks in reading and 6.6 ranks in math. Appended are 13 tables of data, a list of data collection instruments used, and a reference list of 32 items. (HOD)