Developing valid assessment approaches to clinical reasoning performance has been challenging. Situated cognition theory posits that cognition (e.g. clinical reasoning) emerges from interactions between the clinician and situational (contextual) factors and recognizes an opportunity to gain deeper insights into clinical reasoning performance and its assessment through the study of these interactions. The authors apply situated cognition theory to develop a conceptual model to better understand the assessment of clinical reasoning. The model highlights how the interactions between six contextual factors, including assessee, patient, rater, and environment, assessment method, and task, can impact the outcomes of clinical reasoning performance assessment. Exploring the impact of these interactions can provide insights into the nature of clinical reasoning and its assessment. Three significant implications of this model are: (1) credible clinical reasoning performance assessment requires broad sampling of learners by expert raters in diverse workplace-based contexts; (2) contextual factors should be more explicitly defined and explored; and (3) non-linear statistical models are at times necessary to reveal the complex interactions that can impact clinical reasoning performance assessment.