This study was aimed at exploring how to use augmented reality (AR) technology to enhance the effect of performance assessment (PA). A mobile AR performance assessment system (MARPAS) was developed by integrating AR technology to reduce the limitations in observation and assessment during PA. This system includes three modules: Authentication, AR Context Aware, and AR Interaction. It identifies the character of system users, recognises subjects and activities that users should join in, and follows and assists users in showing their works and doing assessments anywhere anytime. Both qualitative and quantitative research were applied in this study, and it presents an action research conducted in PA institutions that, through a questionnaire, gave information in connection to the valuation of mobile AR technology and the achieved effects. The proposed mechanism of PA emphasises the approaches adopted to present student works and provides opportunities for enhancing student communication and interaction. In addition, the system enables students to explain their works and incorporate the feedback they receive into future work. More importantly, mobile AR can be applied to offer personalised features and appropriate information in particular areas. From the observation of survey results, students can interact with real or virtual information based on their needs. During this process, students can observe their own works from varying perspectives, acquire vital knowledge, develop the skills of critical thinking, and transform the process into a substantial self-established learning process.