The importance of formative assessment instudent learning is generally acknowledged, butit is not well understood across higher education.The identification of some key features offormative assessment opens the way for adiscussion of theory. It is argued that thereis a need for further theoretical developmentin respect of formative assessment, which needsto take account of disciplinary epistemology,theories of intellectual and moral development,students' stages of intellectual development,and the psychology of giving and receivingfeedback. A sketch is offered of the directionthat this development might take. It is notedthat formative assessment may be eitherconstructive or inhibitory towards learning. Suggestions are made regarding research intoformative assessment, and how research mightcontribute to the development of pedagogicpractice.