Collaborative learning is being used extensively by educators at all levels. Peer-led team learning in a version of collaborative learning that has shown consistent success in science, technology, engineering and mathematics disciplines. Using a multi-phase research study we describe the development of an observation instrument that can be used to assess peer-led group learning. This paper illustrates the development of a classification system for peer-led learning groups and an instrument based on this classification system. The instrument evaluates small learning groups on two important aspects of group learning: problem solving approach and group interaction style. We provide evidence of the factor structure of the two dimensions using both exploratory and confirmatory factor analysis. We also provide information about the reliability of the two scales as measured by the Cronbach's alpha coefficient. Data from a large peer-led learning programme was used to conduct the factor analysis. Results from the factor analysis confirmed that the instrument is actually measuring two key characteristics of small learning groups: problem solving approach and group interaction style, characteristics that have been linked to effective functioning of the group and to the student learning outcomes. This instrument may be particularly appealing to practitioners (faculty members, those running small-group learning programmes, etc.) because it is easy to use and it does not require extensive time for analysis. (Contains 7 figures and 1 table.)