The recent rise of interest among the medical education community in individual faculty making subjective judgments about medical trainee performance appears to be directly related to the introduction of notions of integrated competency-based education and assessment for learning. Although it is known that assessor expertise plays an important role in performance assessment, the roles played by different factors remain to be unraveled. We therefore conducted an exploratory study with the aim of building a preliminary model to gain a better understanding of assessor expertise. Using a grounded theory approach, we conducted seventeen semi-structured interviews with individual faculty members who differed in professional background and assessment experience. The interviews focused on participants' perceptions of how they arrived at judgments about student performance. The analysis resulted in three categories and three recurring themes within these categories: the categories assessor characteristics, assessors' perceptions of the assessment tasks, and the assessment context, and the themes perceived challenges, coping strategies, and personal development. Central to understanding the key processes in performance assessment appear to be the dynamic interrelatedness of the different factors and the developmental nature of the processes. The results are supported by literature from the field of expertise development and in line with findings from social cognition research. The conceptual framework has implications for faculty development and the design of programs of assessment.