This article describes the development of the Precalculus Concept Assessment (PCA) instrument, a 25-item multiple-choice exam. The reasoning abilities and understandings central to precalculus and foundational for beginning calculus were identified and characterized in a series of research studies and are articulated in the PCA Taxonomy. These include a strong understanding of ideas of "rate of change" and "function," a process view of function, and the ability to use covariational reasoning to examine and represent how two covarying quantities change together. This taxonomy guided the PCA development and now provides the theoretical basis for interpreting and reporting PCA results. A critical element of PCA's design was to identify the constructs essential for learning calculus and to employ methods to assure that PCA items are effective in assessing these constructs. We illustrate the role that cognitive research played during both the design and validation phases of the PCA instrument. We also describe our Four-Phase Instrument Development Framework that articulates the methods used to create and validate PCA. This framework should also be useful for others interested in developing similar instruments in other content areas. The uses of PCA are described and include (a) assessing student learning in college algebra and precalculus, (b) comparing the effectiveness of various curricular treatments, and (c) determining student readiness for calculus. (Contains 11 tables, 5 figures and 3 footnotes.)