Competency-based assessment (CBA) for psychiatric graduate medical education must simultaneously optimize three goals: (1) maximize learning through high quality, continuous formative assessment (assessment for learning); (2) enable robust and trustworthy high stakes decision-making (e.g., graduation, promotion, or selection) through summative assessment (assessment of learning); and (3) support ongoing quality improvement of the curriculum through program evaluation (assessment for program improvement). As such, the CBA system must promote both self-regulated growth and clinical competence. The key to effectively doing so is situating these activities within a carefully designed system of assessment with several critical components: workplace-based assessment, ongoing faculty development, learning analytics, longitudinal coaching, and fit-for-purpose clinical competency committees.