Purpose: This article seeks to enhance our understanding of the ever-present challenge of developing organizational capacity to implement complex education reform initiatives. We analyze the strategies in one large metropolitan education system used to address the district-level and site-level capacity challenges that surfaced as they implemented a multifaceted educator incentive pay program. Research Design: We draw on the theoretical literature on organizational capacity and on data from documents, interviews, and observations collected as part of an in-depth, multiyear study of an educator incentive pay program. Throughout this research process, we incorporated broadly endorsed procedures to minimize bias and error in the collection, analysis, and interpretation of these data. Findings: This case study illustrates an array of interrelated and ongoing capacity challenges highlighted in the literature on the implementation of complex education reform initiatives. It also generates insights about the range of resources and the combination of strategies that may be required to address these challenges and underscores the importance of continuously attending to the dual dimensions of capacity. Implications for Research and Practice: Although case studies of capacity-building challenges can generate useful insights, they do not offer clear prescriptions for "solving" capacity issues. Our study is a point of departure for understanding how school systems seek to address the array of interrelated capacity challenges embedded in a particular genre of reforms and a point of comparison for others who examine the capacity challenges associated with this set of reforms.