The last decade has been marked by experimentation with various methods of assessing teaching knowledge, skills, and abilities that are alternatives to the multiple-choice tests and loosely-structured observations commonly used. While there exists a large body of literature on multiple choice tests as a methodology, less technical information is available on desirable performance-based alternatives. This report looks at the state-of-the-art of performance assessment of teachers to: (1) identify important elements in the process; and (2) summarize lessons learned from the experiences of those who have developed such assessments. It is aimed at educators and policymakers who are exploring the use of performance tasks in teacher assessment systems, focusing on similarities and differences between the assessment of beginning and experienced teachers. The report examines the key stages of development of a reliable and valid teacher assessment system including: defining the purpose of the assessment; identifying components of the assessment system; building capacity; and building legitimacy. The report concludes with a summary of the state-of-the-art of teacher performance assessment and identifies issues still on the frontiers of development. (SM)