Oregon's extended application requirement, adopted by the State Board of Education as a graduation requirement in 2002 coupled with more rigorous state graduation requirements adopted in 2008, have significant capacity implications for local school districts. The purpose of this study was to examine how local school districts in Oregon have implemented the extended application requirement through their existing capacity. District capacity was examined through a survey that asked about four capacity domains: human capacity, organizational capacity, structural capacity, and material capacity. In addition, the survey addressed barriers to implementation as well as capacity needs to support implementation of extended application and new state graduation requirements. A self-administered web-based survey was developed to collect data. The survey was administered to curriculum administrators in all K–12 public school districts (N=175) in Oregon. The response rate was 50% with representation from districts ranging in size from small to large and from all regions of the state, including rural, suburban, and urban settings. The survey used a five-point scale to determine the extent of extended application implementation, district capacity, and implementation barriers. Two open-ended questions asked participants to comment on their capacity needs. Study results showed that extended application implementation progress ranged from very little progress to great progress in districts across the state. The new graduation requirements were identified as a barrier to extended application and will likely impede implementation progress further. Additionally, in multiple regression analysis, district capacity was a predictor of extended application implementation and reflected that districts lacked the capacity to support implementation. Interrelationships were found between the four district capacity domains and implementation which suggest that capacity should be viewed holistically and comprehensively. Furthermore, district capacity analysis should be more intentional in the policy process in order to inform state policy decisions. Capacity-building needs were identified including: increased state-level guidance, time for teachers and administrators to collaborate, and a need for additional professional development, financial resources, and staffing. A coherent, state-wide strategy is recommended to build district capacity to support implementation of extended application and the new graduation requirements.