Public School Education and Community-Based Economic Development are interrelated. Both should serve the individual and society. This study seeks to understand the relationship of the systems on which they are based, and the theories underlying them, on Cape Breton Island. The goal is to determine the possibilities and limitations of public school education in enhancing community-based development and local democracy and decision-making.In recent years, the educational system in Canada has been criticized for its inability to serve the needs of students and of the nations economy. One of the responses to this criticism has been to offer more local autonomy to school boards and schools through site-based management.The crises in education and development are particularly acute in Cape Breton where the economy is undergoing large-scale restructuring. The traditional approach to development here has relied heavily on megaprojects and the support of business ventures by people from outside the region with government grants. The aim has been to create jobs for local people. This strategy has faltered in recent years and the provincial government is turning to community economic development as a way of stimulating local employment.The new thrust towards community development, however, may be seen as a panacea for all the economic and social ills on the Island. In the same way, the move towards decentralization in the education system, and the emphasis on local control of education, may appear to resolve many of the tensions in the school system.The people of Cape Breton are now caught between a past marked by dependency and an uncertain future. They have to cope with local needs and with international trends that affect their lives.The study focuses on the role of public schools as mediating structures in local development. Schools might serve as intermediary ground where efforts in development can be examined and discussed, and where ways might be found for linking education and development. This would involve generating a new language for organizing a perception and communication (Giroux, 1991, p. 5) that could make public school education and development more open, accountable, and democratic.