This article discusses the fairness and legality of competency testing programs for the handicapped. The following concerns are addressed: (1) exemptions for handicapped students; (2) individual determinations; (3) differential diplomas and standards; and (4) differential assessment procedures. A discussion of the legal implications indicates that, although the Federal Constitution, statutes, and regulations (as well as comparable provisions in many states) provide handicapped persons with special protection against unfair and discriminating practices, neither they nor the courts provide specific guidance regarding competency testing of handicapped students. This paper suggests that if parents and policy-makers decide to apply competency testing programs to handicapped students, they should avoid any uniform approach and consider instead an approach based upon individual determinations. (Author/EB)