Education policies for greater accountability of schools assume that schools are capable of building their capacity for continuous improvement. While policy-makers, scholars, and practitioners acknowledge the importance of building school-wide capacity for continuous improvement, empirical evidence to this effect remains thin. In this study, we examine the extent to which school improvement capacity develops over time in a sample of elementary schools in The Netherlands. Leadership practices, school organizational conditions, teacher motivation, and teacher learning were used to measure school-wide capacity for improvement. Mixed-model analysis of longitudinal data from 1,010 teachers of 32 Dutch elementary schools showed that schools are capable of building school-wide capacity, and that sustaining a high level of capacity seemed to be more difficult. The findings suggest that improving leadership may be an important first step in the process of building school-wide capacity. (Contains 4 figures, 3 tables and 1 note.)