This article examines the relationship between preschool quality and children’s early development in a sample of over 7900 children enrolled in 578 preschools in rural Indonesia. Quality was measured by: (1) classroom observations using the Early Childhood Environment Rating Scale-Revised (ECERS-R); (2) teacher characteristics; and (3) structural characteristics of preschools. Children’s development was measured using the Early Development Instrument (EDI). The article proposes two methodological improvements to preschool quality studies. First, an instrumental variable approach is used to correct for measurement error. Second, ECERS-R is adjusted to the local context by contrasting items with Indonesia’s national preschool standards. Results show that observed classroom quality is a significant and meaningful positive predictor of children’s development once models correct for measurement error and apply a locally-adapted measure of classroom quality. In contrast, teacher characteristics and structural characteristics are not significant predictors of child development, while holding observed classroom quality constant.