Two important features of contemporary medical education are recognized. The first is an emphasis on assessment as a tool to ensure quality in training programmes, to motivate students and to direct what they learn. The second is a move to outcome-based education where the learning outcomes are defined and decisions about the curriculum are based on these. These two trends are closely related. If teachers are to do a better job of assessing their students, they need an understanding of the assessment process, an appreciation of the learning outcomes to be assessed and a recognition of the most appropriate tools to assess each outcome. Assessment tools selected should be valid, reliable, practical and have an appropriate impact on student learning. The preferred assessment tool will vary with the outcome to be assessed. It is likely to be some form of written test, a performance test such as an OSCE in which the student's competence can be tested in a simulated situation, and a test of the student's behaviour over time in clinical practice, based on tutors' reports and students' portfolios. An assessment profile can be produced for each student which highlights the learning outcomes the student has achieved at the required standard and other outcomes where this is not the case. For educational as well as economic reasons, there should be collaboration across the continuum of education in test development as it relates to the assessment of learning outcomes and in the implementation of a competence-based approach to assessment.