Since the 1950s, there has been rapid and extensive change in the way assessment is conducted in medical education. Several new methods of assessment have been developed and implemented over this time and they have focused on clinical skills (taking a history from a patient and performing a physical examination), communication skills, procedural skills, and professionalism. In this paper, we provide examples of performance-based assessments in medical education, detailing the benefits and challenges associated with different approaches. While advances in psychometric theory and technology have been paralleled by the development of assessment instruments that improve the evaluation of these skills, additional research is needed, particularly if the assessment is used to make high stake decisions (e.g., promotion and licensure).