Competency-based learning (CBL) systems are becoming more common in K-12 schools across the United States. A range of studies demonstrate the effectiveness of CBL for students, but less research focuses on the manner in which CBL is being adopted in teacher education. This self-study, using Reform-Oriented Collaborative Inquiry protocol, offers insights into the affordances and challenges for faculty who were embedding their state's CBL principles into their classrooms. This study illuminates the work of teacher educators seeking to develop a coherent system that models effective CBL practice for preservice teachers. The findings unpack particularities of two major principles of CBL, specifically 1) heightened attention to performance-based learning and 2) amplified awareness of the importance of responsive and targeted feedback. The findings also illuminate the disruptive nature of CBL in challenging students' expectations about assessment within the teaching and learning process which in turn impacted faculty perceptions.