This paper (1) presents a critical analysis of the literature on school readiness and school failure; (2) discusses the problems that ill conceived policies based upon readiness studies present to the education of learning disabled, regular class, and gifted children; and (3) offers guidelines for policies and programs. Methodological issues raised by the analysis of school readiness research include experimenter bias, errors in sampling procedures or sampling description, matching errors, sample restriction, misinterpretation of identified statistical relationships, and selection of dependent variables. Misinterpretation of the studies has resulted in magnification of the importance of obtained differences, confusing correlation and causation, concluding that no treatment (keeping the student out of school another year) is preferable to early intervention, and misapplying the findings to early entrance or acceleration of gifted students. It is concluded that arbitrary cutoff birthdates as a basis for determining school entry should be replaced by assessing the needs and characteristics of all children and providing them with an individually appropriate educational program. (Author/DB)