It is more than a quarter century since Title I of the Elementary and Secondary Education Act (ESEA) of 1965, the first major Federal legislation authorizing funds for compensatory education for the disadvantaged, came into effect. In 1981, Chapter 1 of the Education Consolidation and Improvement Act (ECIA) replaced Title I. Some Federal funding requirements were modified, but the program functions serving poor children remained essentially intact. Three quarters of all elementary schools, nearly half of middle and junior high schools, and one quarter of high schools are involved. The history and background of compensatory education are reviewed, emphasizing the diverse nature of Chapter 1 programs. In spite of this diversity, most emphasis has been on basic skills and small-group instruction, with the general approaches being pull-out, add-on, in-class, and replacement programs. A number of studies of Chapter 1 effectiveness and outcomes are reviewed. The most important new trends in compensatory education have been defined by the Hawkins Stafford Elementary and Secondary School Improvement Amendments of 1988, which spearheaded a shift from fiscal accountability to educational accountability. Its provisions incorporate much of what has been learned about closing educational gaps for the disadvantaged. (Contains 26 references.) (SLD)