Purpose: This study describes the development and pilot testing of the Observational System for Recording Physical Activity-Elementary School (OSRAC-E) Version. Method: This system was developed to observe and document the levels and types of physical activity and physical and social contexts of physical activity in elementary school students during the school day. Interobserver agreement scores and summary data were calculated. Results: All categories had Kappa statistics greater than .80, with the exception of the activity initiator category. Interobserver agreement scores were 96% or greater. The OSRAC-E was shown to be a reliable observation system that allows researchers to assess physical activity behaviors, the contexts of those behaviors, and the effectiveness of physical activity interventions in the school environment. Conclusion: The OSRAC--E can yield data with high interobserver reliability and provide relatively extensive contextual information about the physical activity of students in elementary schools.