Regulatory agencies are increasingly called upon to review large numbers of environmental contaminants that have not been characterized for their potential to pose a health risk. Additionally, there is special interest in protecting potentially sensitive subpopulations and identifying developmental toxicants that may be present in the environment. Thus, there is an urgent need for efficient methods to screen large numbers of chemicals for their potential to pose a developmental hazard. One potential screening method involves the use of statistically based structure-activity relationship (SAR) tools to predict activity of untested chemicals. Such systems rely on statistical analyses to discern relationships between structure and activity for a training set of substances. Predictions can then be made for an untested substance as long as its structural features are encompassed by chemicals of the training set. In theory, such systems could assist regulatory agencies in their screening efforts; however, to date, there has been little independent evaluation of these tools for this use. To contribute to such an evaluation, the International Life Sciences Institute Risk Science Institute (ILSI RSI) convened a Working Group to examine methodology used to construct statistically based SAR systems for developmental toxicity. This document reports on the deliberations of the Working Group, which concluded that an improved process is needed for utilizing developmental toxicity data in the construction of statistically based SAR models. The process must be objective, reproducible, rational and transparent. Moreover, it must be informed by the expertise of developmental toxicologists and biologists and must be subject to peer review. Birth Defects Research (Part A), 2004. © 2004 Wiley-Liss, Inc.