Four steps should be taken in developing correct physical education programs for handicapped students. Assessment of student need is the first step, and a growing number of assessment instruments are available which provide information on basic locomotor skills and patterns and on physical and motor fitness. They are comprised of items that sample performance for specific age groups of nonhandicapped children and identify areas of below normal performance. After analyzing test results, the second step is to establish long-range goals and enabling objectives for individual students. Following identification of objectives, the physical educator is ready for the third step of determining which intervention strategy will prove most beneficial in enabling handicapped students to reach established goals and objectives. The fourth step of proper placement for handicapped students is crucial to the success of the physical education program. Five optimum placements should be available for students. Students who are performing to normal standards and can participate regularly should be permitted opportunities without modification or limitation, while students with permanent disabilities who can function without assistance, but with slight accommodation, should be mainstreamed into regular physical education classes with appropriate modification. Students with permanent disabilities who can function with some assistance and/or limitations should be mainstreamed with appropriate limitations and/or assistance from a qualified aide. An adapted physical education class is appropriate placement for students with permanent disabilities who also exhibit motor development delays that require remediation activities. Some students can benefit from participating with the regular class while also receiving additional assistance in the adapted physical education class. (JD)