This chapter examines the formation of the theory of action in school reform for School as Learning Community at Gakuyo Junior High School from 2001 to 2003 by focusing on the new principal Masaaki Sato when he transferred from Hiromi Elementary School. He found a “surprising mismatch” between expected and actual results of teachers’ action at Gakuyo Junior High School and described the students as “children going astray” and teachers’ difficult responses. He stressed that “children who keep learning don’t lose their lives”, incorporating Manabu Sato’s theory as “espoused theory” and developed the “design theory”.