Research Findings: Hong Kong launched the new mechanism of the Quality Assurance Inspection (QAI) in 2000 to enforce accountability and school improvement in the sector of early childhood education. The QAI comprises 3 stages: school self-evaluation, external inspection, and release of the QAI report to the public. To understand the roles of self-evaluation and external inspection and their interactions, we analyzed all 80 QAI reports released by the government from 2004 to 2007 and interviewed the principals and teachers of 3 kindergartens that had been ranked excellent, good, and satisfactory on Learning and Teaching performance in the QAI. The results indicated that (a) school performance on self-evaluation was significantly and positively correlated with Learning and Teaching performance but negatively correlated with the number of problems found in the QAI, (b) all kindergartens reported 4 types of challenges brought about by the external inspection (i.e., uncertainty, personnel, workload, and psychological burdens), and (c) the QAI was a facilitative and productive process for school self-evaluation and quality improvement. Practice or Policy: These findings suggest that an effective quality assurance mechanism should maintain a balance between external and internal evaluations and should work toward school empowerment and improvement. Copyright © 2010 Taylor & Francis Group, LLC.