The basic steps and procedures in the development of criterion referenced tests (CRT), as well as the issues and problems associated with these activities are discussed. In the first section of the paper, the discussions focus upon the purpose and defining characteristics of CRTs, item construction and selection, improving item quality, content validity, item and test bias, test scores, and packaging and other considerations. In the second section, the results of a survey conducted to assess current efforts in criterion referenced testing are summarized. Five defining characteristics--program focus, instructional dependence, objective and item generation, test models and packaging, and test scores--are provided for each of the following testing programs: California Test Bureau--McGraw-Hill, Prescriptive Mathematics Inventory; Comprehensive Achievement Monitoring; Individualized Criterion Referenced Testing; Instructional Objectives Exchange; MINNEMAST Curriculum Project--University of Minnesota; National Assessment of Educational Progress; Southwest Regional Laboratory; System for Objectives Based Assessment--Reading, Center for the Study of Evaluation; UCLA; and Zweig and Associates. From this analysis, 10 questions that the CRT developer must answer in order to clarify the nature and purpose of a CRT are provided. (DB) Aspect of National Assessment (NAEP) dealt with in this document: Procedures (Exercise Development).