Purpose: The purpose of this study was to define student learning capacity and to examine the role of the school principal in nurturing it. Method: The study used cross-sectional data from 3,175 students in 70 schools located in a metropolitan area of a Southwestern city. We tested three hypotheses by following a conventional modeling building process in HLM 7.0: "Hypothesis 1"--Principal Support for Student Psychological Needs (PSSPN) is related to school differences in student-perceived autonomy-support; "Hypothesis 2"--PSSPN is related to school differences in student-perceived competence-support; "Hypothesis 3"--Student-perceived need-support mediates the relationship between PSSPN and grit. Results: Evidence aligns with our initial theorizing about student learning capacity and principal support for student psychological needs. Student-perceived need-support, as a social characteristic of capacity, manifests itself through teacher-student interactions in the learning process. Need-supporting interactions varied significantly across schools, and principals played a critical role in developing an instructional environment that students experienced as nurturing autonomy and competence. Implications: PSSPN highlights the transformative effects that regular principal-teacher social exchanges can have on instructional practices. School principals who interacted with teachers about student psychological needs and need-supporting instructional practices contributed to a learning environment that students experienced as autonomy-supporting and competence-supporting.