The No Child Left Behind Act of 2001 (NCLB) requires states to test specified subjects and grades, to establish minimum performance standards for students, schools and school districts, and to provide assistance and impose sanctions on schools and districts that do not meet performance goals as a condition of receiving federal aid. NCLB builds on earlier federal and state education reform initiatives, and its success depends on the willingness and capacity of states and localities to enact its more stringent provisions. This article examines challenges facing states as they implement the new law and concludes that most lack the human and fiscal resources to support school improvement.