Principals play a key leadership role in school effectiveness and student success; however, one area that has received relatively little attention so far is principals' embedded understanding of assessment and grading within the educational context where they work. We examined 141 Chinese school principals' conceptions of assessment and grading practices using a survey research design. Our results indicated that principals viewed summative assessment as necessarily serving two purposes: (a) accountability, and (b) improvement of teaching and learning. Assessment that does not serve these dual purposes was not viewed as maximally supporting learning in this educational context. The study further found that accountability pressures influenced principals' conceptions of assessment and consequently shaped their approaches to grading in China's examination-oriented culture. This study provides implications for a heightened understanding of principals' leadership in the crucial role that student assessment plays in both enhancing instruction and student learning and ever-expanding accountability mandates within the Chinese education context and other educational contexts globally.