This study explores the implementation of Differentiated Instruction (DI) in Philippine multigrade classrooms and develops a tool to assess teacher proficiency in DI. Employing an exploratory sequential mixed-method design, the qualitative phase included focus group discussions with eight multigrade teachers, capturing their experiences and challenges in DI. These insights informed the creation of the Multigrade Differentiated Instruction Performance Appraisal Tool, which assesses DI proficiency across instructional planning, delivery, and classroom management. The tool underwent expert validation and reliability testing, with Cronbach's Alpha of 0.91, indicating high internal consistency. The quantitative phase surveyed 163 multigrade teachers, revealing that DI implementation was generally effective, particularly in aligning lessons with curriculum standards (M = 4.09, SD = 0.73) and fostering a supportive learning environment. However, teachers faced challenges in utilizing technology, contextualized materials, and diverse assessment methods. Findings support the DI Assessment Checklist as a valuable tool for teachers and administrators to enhance instructional practices through reflective teaching. Recommendations include expanding training programs, improving access to instructional resources, and integrating DI-focused technology training. Further research should explore regional variations in DI implementation to inform more localized educational policies. This study provides practical insights to support teachers in effectively managing the complexities of multigrade education, ensuring equitable and inclusive learning experiences for diverse learners.