Over the past few decades, educators in general, and language teachers in specific, were more inclined towards using testing techniques that resembled real-life language performance. Unlike traditional paper-and-pencil language tests that required test-takers to attempt tests that were based on artificial and contrived language content, performance tests are authentic so that the test-taker is asked to perform language tasks that he or she will need to perform in real-life interactions. A very valuable type of performance test is called portfolio assessment in which a record of students' performance across a wide range of language tasks over a logical period of time is kept so that a profile of performance can be obtained for the evaluation of achievement. This paper will define performance assessment, trace its origins and development, explain how performance tests can be constructed, and describes the nature and advantages of portfolios.