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The Baltic states, as newer members of the European Union (EU), have been involved in the process of developing vocational education and training (VET) that was initiated by the Lisbon Council in 2000 and built upon by the 2002 Copenhagen Declaration. This chapter contributes to a collection of readings that provide information about the reform and development of VET in these countries in light of this European activity. The chapter begins with the political, economic and social background of Estonia dating from 1990. It then provides an overview of the Estonian educational system, covering the following areas: current educational policy strategies and areas of educational reform; and a skill needs assessment, arguing that the key challenge in the Estonian labour market is the mismatch between the supply and demand of labour. The next section examines recent developments in education and training within a lifelong learning perspective, outlining policy development, the adaptation of a legal framework, governance and responsible bodies, and the contribution of the international PHARE projects. The authors then examine the modernisation of the education and training system, describing its structure and organisation, educational and occupational standards, certification processes, the teaching workforce, the modernisation of training infrastructure and equipment, rates of participation in education and training, guidance and counselling initiatives, and current activities. They conclude that, in terms of Lisbon targets, Estonia leads in comparison to other candidate countries but still has a way to go to equal most EU averages. The main issues are, however, already being addressed by the government. These include information and communications technology (ICT) development, increasing the employment rate, providing greater access to education, strengthening research and development, catering for foreign languages, and fostering lifelong learning.