Designed to encourage and aid educators in developing interactive video software, this guide is an outgrowth of an interactive video research and demonstration project at the University of Oregon. Known as Project LIVE (Learning through Interactive Video Education), the objectives of the program were to: (1) develop interactive video courseware for secondary-aged handicapped learners, and (2) research the effectiveness of this instructional technology in relation to their learning performance. Section 1 of the manual provides an overview of interactive video and its various educational applications by explaining the hardware needed to operate such a system. Six instructional formats available to the instructional developer are then discussed: tutorial, simulation, drill and practice, educational games, guided presentations, and assessment. Designed for those who are interested in developing interactive video courseware, Section 2 presents 17 steps found to be important in the development process, and groups these steps into four broad development areas--instructional design, video production, computer production, and courseware finalization. A list of references completes the document. (JB)