This article explores the responses of school principals of small rural schools in Victoria, Australia to leadership challenges they identify as characteristic of these contexts. The research is an exercise in grounded theory building, with the focus on the principalship as it is enacted in small rural settings. The article also seeks to trace the impact of macro and meso influences on micro rural contexts. While many very positive attributes of small rural schools are evident, this article speaks to principalship engagement with contextual problems--issues concerning work intensification, role multiplicity, school viability, new regulatory funding requirements and the abandonment of equity policies in education--since there is a dearth of information in Australia at this time about how school principals confront these challenges in small rural locations. The research exposes a growing culture of creative collaborative responses to the pervasive impediments of leading small rural schools.