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Recent research emphasises the role of Australian rural schools in assisting the development of community capacity through the cultivation of community social capital. This paper presents the results from one of five sites selected to participate in a national study into the contribution of rural schools to their communities, apart from their traditional role of educating young people. The focus of this particular school is on the process of developing and implementing a VET (vocational education and training) in Schools program, the outcomes of the program, and the role of leadership as a key influencing factor. In an attempt to address low school retention rates, the Cooktown State School and Secondary Department and its community collaboratively developed a VET in Schools program for students identified as 'at risk' of dropping out of school. This needs-driven and culturally inclusive program involves work placements which reflect the industry base of the region and include rural skills, building and construction, engineering (pre-vocational), basic office skills and hospitality. The initiative is based on a partnership between the school, local community, and State and Commonwealth education authorities. The paper describes the reasons for the effectiveness of the program, including a leadership process centred around extensive consultation with stakeholders, and a readiness to extend the traditional boundaries of government policy and practice.