In today's globalized world, intercultural understanding is a crucial skill that fosters respectful and productive interactions among diverse populations. Such skills are especially critical in today's workforce, which increasingly demands cross-cultural and international collaboration and partnerships. By explicitly teaching and assessing intercultural understanding, schools equip students with the necessary skills to engage respectfully and effectively with different cultures and, in turn, promote a more inclusive and harmonious society. This literature review (a) provides a working definition of intercultural understanding, (b) describes how intercultural understanding develops, (c) discusses specific instructional practices that support the development of intercultural understanding, and (d) analyzes how intercultural understanding has been assessed. It concludes with implications for the design and use of intercultural understanding assessments in primary and secondary schools.