The association between school tobacco policies and tobacco use prevalence among students were examined. A two stage cluster sample design with probability proportional to the enrolment in grades VIII-X was used. Comparison was made between schools with a tobacco policy (Federal schools) and schools without a policy (State schools). Stratified probability samples of 50 schools each were selected. SUDAAN and the C-sample procedure in Epi-Info was used for statistical analysis. Students from State schools (without tobacco policy) reported significantly higher ever and current any tobacco use, current smokeless tobacco use and current smoking compared to Federal schools (with tobacco policy) both in rural and urban areas. Classroom teaching on the harmful effects of tobacco was significantly higher (17-24 times) in Federal schools than State schools both in rural and urban areas. Parental tobacco use was similar for students in Federal and State schools. Students attending state schools were more likely than students attending Federal schools to have friends who smoke or chew tobacco. These findings suggest that the wider introduction of comprehensive school policies may help to reduce adolescent tobacco use.