The Â£20m programme was launched last year with underperforming schools getting access to expertise and more resources.
Around two thirds of the schools had improved on last year's GCSE results.
Education Minister Huw Lewis said there had been a "breakthrough" in performance.
"These are some of our most challenged schools and to see some of them reporting percentage improvement in the double figures  really is  remarkable."
Prof Mel Ainscow, champion for Schools Challenge Cymru, said at this stage Wales was ahead of where London and Manchester had been after the first year of their programmes.
"Overall the results are exceptionally good," he told BBC Wales.
"Some of the schools have made almost unbelievable progress including some schools serving quite disadvantaged communities where in the past people have had pretty low expectations.
"We're seeing with collective effort and support from outside people in those schools are really making a difference."
Although a third of the 40 schools had not improved results, Prof Ainscow said he expected progress at all schools in 2016 and the focus in the second year would be on helping those that needed to catch up.
Ravi Pawar, head of Blackwood Comprehensive, which had seen a 10% improvement in A* to C grades, said it was not about quick gains.
"The funding itself is important and enables us to make investments we need to sustain improvement for the future," he said.
The school's learning resources centre has been renovated with up to date computers, and the exams hall itself had also been improved.
St Cenydd in Caerphilly, Tonypandy and Pentrehafod in Swansea all reported their best ever results.
Martin Holland, head of Ysgol Clywedog in Wrexham - where results have provisionally improved by 4.5% - said they had put a lot of effort in turning things around after the school was in special measures.
"Belief is the biggest single factor - that students can achieve but also from the staff's perspective.
"There was a huge amount of negativity associated with the school and we've tried to turn that around. It's a place of vibrancy and energy with a can-do attitude."
Most of the 40 secondary schools in Wales which were challenged by ministers to improve have shown progress in their GCSE results.