BACKGROUND: Faculty development lays the foundation for the quality enhancement in medical education. However, programs are not always based on the needs of the participants, and there is dearth of information on methods to derive faculty's needs. The Medical Education Unit at the University of Dammam, Saudi Arabia, carried out an innovative method to identify and prioritize faculty needs in order to plan future activities. METHODS: A questionnaire was designed, pilot-tested and administered to all faculty members (N=200). The respondents rated the perceived importance (high, moderate, low) and their performance (good, average, poor) on twelve competencies described in the literature. The ratings of perceived importance - high/moderate, and self-rated performance- average/poor, were summed up to determine priority rankings for continuing education. The respondents' rating of various continuing education activities, their willingness to participate and commit time, and their suggestions for strengthening faculty development were also analyzed. RESULTS: All the twelve competencies were perceived as 'highly important' by the subjects. They felt most confident in teaching in large and small groups, attitudes and ethical values, and decision making skills. The competencies prioritized as 'gaps' were knowing how to develop learning resources, plan curriculum, evaluate courses and conduct research. The prioritized activities were specialized courses, orientation workshops for the new faculty, and training in educational research skills. This implied a multi-phased approach to faculty development. A majority (62.4%) were willing to devote 2.2 hours per week to faculty development. Respondents suggested initiatives that should be undertaken by the Medical Education Unit and the broader institution. CONCLUSION: We demonstrated a participatory approach to needs assessment by identifying the gaps between 'perceived importance' and 'self-rated performance', as criteria for determining priorities. Findings also demonstrated the need for adopting a comprehensive approach to faculty development in which both departmental and organizational initiatives are required. Our findings are applicable to the Gulf Region context and our methodology can be applied anywhere. [ABSTRACT FROM AUTHOR]