The federal No Child Left Behind Act of 2001 (NCLB) expanded the federal role in American education, and by doing so altered the distribution of power among the federal government, states, and local districts. When the law was enacted, it was unclear how this change in the dis- tribution of power would play itself out. This study examines the developing set of relationships between federal, state, and local officials under the new law and the factors that have contributed to a growing conflict over implementation. To fully understand the implications of NCLB requires examining these interactions as well as understanding the substantive educational issues it raises. We identify three factors that contributed to the growing dissatisfaction with the law, namely, the Bush administration’s approach to federalism, the states’ limited capacity to meet the new requirements, and the fiscal constraints facing state governments. We argue that these factors have contributed to the conflict with federal officials, eroded state commitment to the law, and complicated implementation efforts.