This paper describes an item response theory (IRT) based method of differential item functioning (DIF) detection that involves neither separate calibration nor ability grouping. IRT is used to generate residual scores, scores free of the effects of person or group ability and item difficulty. Analysis of variance is then used to test the group differences in residual scores. Simulation studies were conducted to examine the power and error rate of the method in terms of varying sample sizes, difference reference or focal group ratios, and varying degrees of group ability difference. Also investigated was the robustness of the procedure to moderate model-data misfit. Mantel-Haenszel statistics were also computed for comparison purposes. Desirable features of the new (IRT-ANOVA) method include: (1) concurrent calibration; (2) no ability grouping; (3) capability to examine interaction effects; (4) applicability to both dichotomous and polytomous items; and (5) applicability to relatively small sample sizes. Limitations and advantages of the method are discussed. Six figures illustrate the analyses. (Contains 2 references.) (SLD)