Item response theory (IRT) methodology is introduced as a tool for improving assessment instruments used with people who have disabilities. Need for this approach in rehabilitation is emphasized; differences between IRT and classical test theory are clarified. Concepts essential to understanding IRT are defined, necessary data assumptions are identified, and specific data analysis techniques, using software such as TESTFACT and BILOG, are described. An example of IRT analysis applied to a subtest of the "General Aptitude Test Battery" (GATB) administered to people who have diverse disabilities is provided. Future potential uses of this approach in rehabilitation are outlined.