The article examines psychological and pedagogical contexts of the birth and the development of formative evaluation in second and foreign language teaching and learning. Research on its educational value, meta-analyses and case studies conducted in a number of school systems under the auspices of the Organisation for Economic Co-operation and Development (OECD) are presented with examples of ways in which research informed the educational policy of various countries and impacted on school evaluation strategies. Attention is given to challenges and controversies faced by schools in the process of implementing formative evaluation and/or integrating it with summative approaches. Implications are also sought for pre- and in-service teacher education.