Purpose: The purpose of this article is to describe and analyze how three principals attempting to establish effective inclusive schools for students with disabilities identified and learned from failure, with a specific focus on how failure was used to drive school improvement efforts. Design/methodology/approach: This qualitative study involved interviews and observations during one school year in an urban school district in the southwestern United States. Participants varied in their levels of experience and their perceptions about establishing inclusion in their schools. In addition, each school ranged in the length of time working toward implementing inclusion and the relative success of their reform efforts. Findings: This study presents insights into several types of failures with a range of causation, from what we term "unnecessary failures," to "complex coordination failures" and "trial failures." In response to these failures, the principals in this study attempted to foster a culture of professionalism and trust by creating avenues for relationship-building that would allow teachers and staff to buy into the inclusive mission of the school. Principals also attempted to build school capacity by working to strengthen teams and pre-existing structures and to cultivate teacher-leaders that could improve communication, motivate others and effectively lead meetings that would encourage authentic collaboration. Originality/value: Analyzing and learning from instances of failure is an important practice, especially for failures that are unexpected, yet much of the literature on leading from failure exists in business management scholarship, with very limited examples in the area of special education and special education school leadership.