Past studies have identified the following cognitive skills relevant to conceptual design: divergent thinking, spatial reasoning, visual thinking, abstract reasoning, and problem formulation (PF). Standardized tests are being developed to assess these skills. The tests on divergent thinking and visual thinking are fully developed and validated; this paper focuses on the development of a test of abstract reasoning in the context of engineering design. Similar to the two previous papers, this paper reports on the theoretical and empirical basis for skill identification and test development. Cognitive studies of human problem solving and design thinking revealed four indicators of abstract reasoning: qualitative deductive reasoning (DR), qualitative inductive reasoning (IR), analogical reasoning (AnR), and abductive reasoning (AbR). Each of these is characterized in terms of measurable indicators. The paper presents test construction procedures, trial runs, data collection, norming studies, and test refinement. Initial versions of the test were given to approximately 250 subjects to determine the clarity of the test problems, time allocation and to gauge the difficulty level. A protocol study was also conducted to assess test content validity. The beta version was given to approximately 100 students and the data collected was used for norming studies and test validation. Analysis of test results suggested high internal consistency; factor analysis revealed four eigenvalues above 1.0, indicating assessment of four different subskills by the test (as initially proposed by four indicators). The composite Cronbachs alpha for all of the factors together was found to be 0.579. Future research will be conducted on criterion validity.