In Part 1 of this two-part review article (Alderson & Banerjee, 2001), we first addressed issues of washback, ethics, politics and standards. After a discussion of trends in testing on a national level and in testing for specific purposes, we surveyed developments in computer-based testing and then finally examined self-assessment, alternative assessment and the assessment of young learners. In this second part, we begin by discussing recent theories of construct validity and the theories of language use that help define the constructs that we wish to measure through language tests. The main sections of the second part concentrate on summarising recent research into the constructs themselves, in turn addressing reading, listening, grammatical and lexical abilities, speaking and writing. Finally we discuss a number of outstanding issues in the field.