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In this paper I formally proposes a general theory of educational expansion to explain how and why educational expansion can produce various patterns of education-based inequality and mobility across country and time. By integrating both micro- and macro-level theoretical approaches, I have examined the relationship between educational expansion and educational attainment, and how educational expansion affects the origin-destination associations as well as income returns to education. I argue that to understand why there exist different empirical patterns in various societies, we need to view educational expansion as a dynamic process that produces multi-leveled intrinsically connected consequences. Based on formal modeling and simulation analyses, results demonstrate that educational expansion exerts stepwise effects on education-based inequality and mobility. They also suggest that how educational expansion affects education-based inequality and mobility is contingent upon three factors in a given setting: (1) the initial social group differences in the ability and resource distribution; (2) the group share of schooling at a certain level before the expansion; (3) the structural and institutional changes introduced by educational expansion that modify the ability and resource requirements for schooling. Across societies, (4) the institutional differences in the sociopolitical contexts further drive the variations in the patterns caused by the above factors.