Within the context of a large computer-based instructional system (CBI), the Air Forces Advanced Instructional System, instructional needs and requirements are evaluated as determinants of computer terminal design. It is shown that traditional definitions and uses of computer managed instruction (CMI) and computer assisted instruction (CAI) must be expanded to encompass different levels of instructional requirements matched by corresponding levels of terminal hardware, terminal hardware being a major cost factor in a CBI system. A working prototype terminal using new microprocessor technology and how it was designed from one level of instructional requirements is described along with data for preliminary use of the terminal. Pilot studies of the prototype microterminal showed a high user acceptance of the device and students using the completed experimental device completed their lesson material 30% faster than a control group. While no test grade differences between users and nonusers as determined by test scores were shown, the pilot study demonstrates the viability of using microprocessor technology to solve an identified instructional need in a CBI system. References, figures, and questionnaire results are appended. (Author/JPF)