A qualitative method for assessing the cognitive and linguistic development of bilingual children is presented, and its underlying model is discussed. The model views language learning as a concept formation process in three domains: cognitive; cultural; and linguistic. This method has been found useful in accurately differentiating genuine handicapping conditions, disabilities, giftedness, and normal second language learning. Two major methodological needs in assessment and identification of language-minority, low-income, gifted children are discussed: (1) development of psycholinguistic models including culture, cognition, and language; and (2) control of external factors influencing language and cognitive development. Application of this qualitative assessment method is illustrated in a case study that included a home language survey, parent and teacher ratings of the child's language proficiencies and talents in school and home environments, and standardized language and nonverbal intelligence tests. Dilemmas evaluators face in assessing bilingual children are discussed in light of myths and misconceptions. (Author/MSE)