A teacher's manual for operating the DX System, a software package for use in diagnostic testing programs, is presented. The DX System is constructed to present test items based on the individual student's pattern of responses. Described are: (1) system components designed to run on an Apple II computer; (2) program options allowing the user to administer tests, collect summary reports, and input new and revised tests; and (3) a system demonstration taking the user through a step-by-step test administration and summary of results, using two prototype tests measuring student performance in pronoun usage and reading comprehension. Included in a section on DX System implementation are subdivisions on test construction, entry of test items, test administration, summaries of results, and teaching and retesting. Samples are given showing test item layout and test performance summaries. A flow chart of test item presentation follows the text. (LMO)