Inclusive education was introduced into the Malaysian school system as a pilot scheme in 1994, involving a small number of elementary schools throughout the country. This study examines teachers' and principals' conceptions of inclusive education, their understanding of the Inclusive Education Policy and their attitudes towards the pilot implementation of inclusive education. Using individual interviews and surveys, the researcher explored the views of regular and special education teachers from pilot and non-pilot elementary schools. A total of 36 special and regular classroom teachers and six principals from six geographically representative pilot schools and 18 traditional classroom teachers from six matching non-pilot schools participated in this study. Data examination showed that differences existed in the teachers' conceptions of inclusive education. Seven hierarchically ordered conceptions of inclusive education were identified. They ranged from the provision of educational opportunities in the traditional classroom for all students regardless of disability to the provision of enrichment for students with special abilities. Teachers were found to have limited understanding of the educational policies related to inclusive education. Many principals and teachers, nevertheless, favoured inclusive education but the teachers were concerned about an increase in workload as a result of the inclusion of children with special needs in their classes. Class size was also seen as a barrier to implementing inclusive education. It was concluded that principals and teachers were concerned about the inadequate professional preparation of teachers for inclusive education and the difficulties of coping with children with special needs when placed in the traditional classroom settings. These findings have serious educational implications and support the need for comprehensive inservice training programmes that are designed to meet the needs of teachers during pre-service programmes and in in-service training. The researcher also gave some attention to the process of change as it occurred during the pilot implementation of inclusive education while her discussion of theoretical issues, related to the implementation, led to the development of an explanatory model to assist understanding of an approach to the further implementation of inclusive education in Malaysia.