As a result of both demographic and social changes in the U.S., organizations have become much more diverse. Diversity presents unique challenges for management as it is linked to both positive and negative organizational performance outcomes (Mannix & Neale, 2005). Diversity, by itself, may not be sufficient to achieve competitive advantage. Effective diversity management becomes an important issue for organizations to consider. The current research uses Situational Judgment Test (SJT) methodology to develop an assessment measuring Diversity Management Skill. The development of a SJT involves a three-step process: Creation of critical incidents, generation of response options, and use of SME response option ratings to determine scoring. The Diversity Management Skill SJT displays promising results and is an effective predictor of diversity performance.