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Purpose: Performance evaluation informs professional development and helps school personnel improve student learning. Although psychometric literature indicates that a rational, sound, and coherent standard-setting process adds to the credibility of an assessment, few studies have empirically examined the decision-making process. This article sheds light on the inner workings of setting cut scores for leadership proficiency from the deliberative perspectives of expert-panel participants, including principals, teachers, district supervisors, and researchers. Research Design: Qualitative methods are used to observe and document a standards-setting process as it takes place and to analyze the results. Findings: The findings indicate that setting cut scores for principal leadership proficiency is a cognitively demanding but achievable process for effective implementation of carefully designed procedures. The study also provides insight regarding the influence of external factors, such as backgrounds of panelists, consideration of school contexts, and concerns about consequence during the standard-setting deliberation. [ABSTRACT FROM PUBLISHER]