Assessments scored with diagnostic models are increasingly popular because they provide fine-grained information about student achievement. Because of differences in how diagnostic assessments are scored and how results are used, the information teachers must know to interpret and use results may differ from concepts traditionally included in assessment literacy trainings for assessments that produce a raw or scale score. In this study, we connect assessment literacy and score reporting literature to understand teachers' assessment literacy in a diagnostic assessment context as demonstrated by responses to focus groups and surveys. Results summarize teachers' descriptions of fundamental diagnostic assessment concepts, understanding of the diagnostic assessment and results produced, and how diagnostic assessment results influence their instructional decision-making. Teachers understood how to use results and were comfortable using the term "mastery" when interpreting score report contents and planning next instruction. However, teachers were unsure how mastery was calculated and some misinterpreted mastery as representing a percent correct rather than a probability value. We share implications for others implementing large-scale diagnostic assessments or designing score reports for these systems.