Assessment and evaluation at all levels of educational systems have become policy priorities for many countries. Two common reasons for this are student learning expectations and accountability. Although much effort has been put into the creation and refinement of content standards, standardized tests, and methods for using testing results, there has been less attention paid to the development of performance standards (proficiency levels) that greatly affect policy decision making. The present study investigates the Objective Standard Setting Model (OSS) as an improved criterion-referenced method for setting multilevel performance standards. To demonstrate how OSS can be employed for performance standard setting, our study used data from preservice teachers completing an assessment literacy test in a pre- and posttest environment. Using OSS, performance standard levels of "proficient" and "excellent" were established with clear content-related descriptions of growth in student content mastery.