In the past few years, since the government’s declaration of the Three Acts for Experimental Education and the Act for Education Development of Schools in Remote Areas, more and more state schools in remote areas have been considering or deciding to innovate and transform the schools’ management through the strategy of multi-grade teaching, as based on the experimental ideas. However, it is worthwhile to discuss how the school principals manage and deal with the problems or difficulties under the state school system while taking multi-grade teaching as an approach. The data collected in this study came from the meeting minutes and field observations in a state school that has been participating in an innovative multi-grade experimental education program supported by the Ministry of Education for three years. Using a narrative inquiry approach, the researchers investigated why and how the school has been taking the approach of multi-grade teaching, discussed the mutual influences and development among colleagues, and analyzed their difficulties and problem-solving strategies. According to the research findings, the school implemented the innovative multi-grade experimental project under the predicament of declining student enrollment. During the implementation process, the teachers actively participated in the project through collaborative teaching and sharing, and they have maintained continuous professional discourse with subject experts; as a result of the positive mutual impacts among the participants, changes in teacher culture have been taking place. Based on the concept of striking a balance between the basic learning subjects and the experimental courses, the teachers adjusted their teaching methods according to the pupils’ learning performance. However, the school faced the difficulties of high administrative load and educational evaluations, the compilation of multi-grade materials, the requirement of additional spaces for multi-grade teaching, and the proper ways for the admission of pupils. Finally, there are some factors that may help keep the school moving forward, such as the mutual trust and company among schoolteachers, parents’ trust and confidence, as well as teachers’ working hard to enhance pupils’ learning performance.