The objectives of this research are to describe the reality of applying Educational Indicators System to improve school principals' performance in the Sultanate of Oman and to reveal its benefits regarding three areas: principals role, teachers' professional development, and students' academic achievement. The study also aimed to investigate the challenges faced by school principals while employing educational indicators system in practice. In addition, the study aimed to identify the differences while applying EIS, as well as challenges faced by the principals, based on five variables: gender, academic qualification, years of experience, school level, and Educational governorate. Finally, the study proposed some measures that can improve the way of using the educational indicators system by school principals, based on the areas of focus by the study. To achieve the objectives of the study and test its hypotheses, the analytical descriptive method was used. The available literature on educational indicators system was explored and analyzed. Moreover, the study tools: questionnaire and interview were prepared and tested for their reliability and validity. The questionnaire consisted of 60 statements, classified into two main aspects: (1) the reality of applying educational indicators system, which focused on three areas: school principal's role, teachers' professional development, and students' academic achievement; and (2) challenges faced by school principals in implementing the educational indicators' system. One of the research tools, a questionnaire was used on a study sample, which consisted of 315 school principals, both males and females, from eight educational governorates: Muscat, Batinah North, Batinah South, Dakhliah, Sharqiya North, Sharqiya South, Dhahira and Dhofar. The random stratified sampling method was used in the study. The other tool, an interview was used on a sample consisting 30 school administration supervisors, school performance evaluation supervisors and educational supervisors. To answer the research questions of the study and to test the validity of its hypotheses, statistical processing of the data was performed using means, standard deviation, ordering by relative importance (ranking), T-test, one-way ANOVA, and Tukey HSD, for comparison. The study revealed the following results: • The estimates of the study sample regarding the contribution by the reality of applying educational indicators system in improving school performance was high. There were statistically significant differences between school principals at the level of a < 0.05 on the reality of employing educational indicators system in improving school performance. These differences were based on the variables: gender in favor of females; academic qualifications in favor of diploma holders; and the governorate in favor of Batinah North while there were no statistically significant differences at the level of a < 0.05 due to both the variables of experience' and 'school level' from the point of view of the study sample. According to the data calculations of the study, the challenges faced by school principals in employing educational indicators system to improve school performance, was high, There was a statistically significant difference at the level of a < 0.05, due to gender in favor of females; and governorate in favor of Dakhliah, on the challenges faced by school principals in employing educational indicators system. However, there were no statistically significant differences at the level of a < 0.05 due to the variables of 'academic qualification', 'experience', and 'school level'. Accepting the first hypothesis, it is stated that there is a high degree of appreciation in the reality of the use of the educational indicators system and the improving of school performance by school principals due to their personal variables in the areas of principals duties, teachers professional development and students' academic achievement; as reported by the study sample. Accepting the second hypothesis, it is revealed that there is no statistically significant difference at the level of a < 0.05 between the reality of the use of the educational indicators system and the expected challenge to develop the system due the personal information variables as followed; gender, academic qualification, years of experience, school level and educational governorate. Based on the results of the study, the researcher proposes several measures that can be used in applying the system of educational indicators for improving schools' performance in the Sultanate of Oman. The most important measure is to create a clear vision for employing educational indicators system among school principals and other supervising groups; and to train school principals and supervisors on related issues of extracting, reading, understanding and analyzing data, shapes and graphs obtained from educational indicators system. Another important proposition is to disseminate the culture of using educational indicators in assessing educational systems, while raising the awareness of how to employ them in schools. Not less important, is targeting the attitudes of those who work at school level and increasing their knowledge and awareness of the importance of educational indicators in improving school performance. In addition, addressing deficiencies in the Internet service in schools, and providing infrastructure; like internal networks, computers and others necessary accessories that are vital for a full realization of the benefits of educational indicators. The study also suggests a range of areas for future research and studies that could be conducted in regards to the field of educational indicators.