Effective school leadership and ongoing teacher capacity-building are essential aspects of school reform and improving educational outcomes for students in developing countries. This paper examines a Timor-Leste curriculum reform and associated school leader capacity-building and the implementation processes for building sustainability, within the context of research literature regarding effective professional development and successful foreign aid principles. The Timor-Leste leadership program was developed using an interpretivist paradigm and action research, with the authors being program designers and managers embedded in the context. School leader interviews and surveys, meeting notes and monitoring and evaluation reports, also teacher skills and student achievement data, were continuously examined to analyse issues and plan actions and solutions. Findings outline early impacts in relation to changing school leader behaviours, improved teacher skills and increased student literacy and numeracy, while also presenting implementation processes and actions taken to overcome challenges in relation to research-informed foreign aid principles. Given the importance of foreign aid for supporting significant educational improvement in developing countries, this Timor-Leste leadership capacity-building case study provides an example relevant to an under-researched area. While the focus is on one particular country and reform involving curriculum and professional development, the paper has value for other education contexts and system change initiatives which involve collaborations with foreign aid donors.