This, the first biennial report to Congress by the Director, as required under The Education Sciences Reform Act (ESRA), describes three goals that have guided the work of the Institute and provides an overview of progress through the end of 2004. It describes the major projects carried out within each center of the Institute over the past two years. And, as required by ESRA, it includes a list of all grants and contracts in excess of $100,000 made during the first two years of the Institute's existence. The nation needs policymakers, educators, and concerned citizens to see the value of rigorous evidence, to turn to it when difficult decisions arise, and to insist that new policies that cannot wait for evidence be tested as they are implemented. That requires a transformation in the way education is conducted. The Institute is at the center of that transformation because that is their statutory mission and there is substantial, bipartisan political support for evidence-based education policy. The Institute has made substantial progress in the last two years. Eventual success will depend on the continued support by Congress of the mission and activities of the Institute. [For the "Institute of Education Sciences First Biennial Report to Congress, 2002-2004," see ED486487.]