For more than a century, the contention that sport builds character has been popular among educators. The more cautious perspective of researchers is that sport might build character, but only under the right conditions. For example, while the limited research to date suggests that competitive team sports may encourage high social perspective-taking ability, it may also discourage the ability to feel or display empathy. If sports are to have a positive impact on the character development of participants, the leadership and behavior of the coach is key. In this article, the authors report on three aspects of character that may be influenced by sport participation: perspective-taking and empathy; moral reasoning; and motivational orientation. The authors provide research-based recommendations for coaches and others in sport leadership positions. The complete article appears in the March 2006 issue of the President’s Council on Physical Fitness and Sports Research Digest. The Research Digest is published four times a year and includes manuscripts related to physical activity and health. Articles are available free through the President’s Council on Physical Fitness and Sports at http://www.fitness.gov/pcpfs_research_digs.htm