This report argues for the central involvement of faculty themselves in collaborative peer review for the improvement of college teaching. An early section makes the case for formative evaluation to improve teaching and argues that collaborative peer review is well suited to the formative evaluation task. The next section examines faculty roles in formative evaluation and also the roles of students, academic administrators, teaching consultants, and faculty development programs. The following section reviews various methods used in formative evaluation including direct classroom observation, videotaping of classes, evaluation of course materials, an assessment of instructor evaluation of the academic work of students, and analysis of teaching portfolios. The section that follows describes, compares, and analyzes some examples of single-institution and multi-institution programs currently in operation. The next section discusses disincentives that may keep faculty from participating in peer evaluation including attitudes about academic freedom, fairness, and other factors. Final sections discuss incentives to improve participation and the personal and institutional benefits of peer formative evaluation. A final section presents eight recommendations for designing peer review processes based on analysis of the research and of programs now operating at some institutions. (Contains 219 references.) (JB)