This article describes the development and application of a two-tier multiple choice diagnostic instrument to assess high school students' understanding of inorganic chemistry qualitative analysis. The development of the diagnostic instrument was guided by the framework outlined by Treagust. The instrument was administered to 915 Grade 10 students (15 to 17 years old) from 11 schools after they had learned the theory involved in qualitative analysis and after a series of qualitative analysis practical sessions. The Cronbach alpha reliability of the instrument was .68, the facility indices ranged from .17 to .48, and the discrimination indices ranged from .20 to .53. The study showed that the Grade 10 students had difficulty understanding the reactions involved in the identification of cations and anions, for example, double decomposition reactions, the formation and reaction of complex salts, and thermal decomposition. The findings of the study and literature on practical work were used to develop a qualitative analysis teaching package. © 2002 Wiley Periodicals Inc. J Res Sci Teach 39: 283–301, 2002