Diagnostic testing can provide specific information about student skills as a decision-making aid to teachers in prescribing instruction, identifying needs for remediation, determining effective instructional materials and methods, and ultimately, improving student learning. Diagnostic testing, as viewed here, includes individual and group assessment of students' skills in specified cognitive domains. A methodology is presented for designing diagnostic tests which assess the extent of student learning and are sensitive to sources of difficulty within a skill or context area. This 5-step methodology for diagnostic test development includes: (1) Developing a skill blueprint including a general description of the objective or skill, a sample item, content limits, and response limits; (2) Specifying the skill map including sub-skills or simpler contexts which students should master enroute to the desired skill under assessment; (3) Formulating test items that match specifications and follow conventions for sound item-writing; (4) Reviewing test items to insure match to specifications and technical quality; and (5) Field testing the items and revising to insure that the test is appropriate for the intended student population and structured to provide meaningful and reliable diagnostic information. (Author)