The final product of the Accreditation Council for Graduate Medical Education (ACGME) Outcomes Project is to improve health care through ensuring the competence of physicians during their training and beyond. Its success depends on a paradigm shift to a competency-based model of medical education. This article presents an overview of the model and describes the first stages of this multistep transition in a university setting. Our hope is to raise awareness of the impact on the pediatric community at large and provide a foundation on which other educators can continue to build. The ACGME established 6 domains of competence as the first step in the paradigm shift. To begin work on the second step of establishing benchmarks for evaluation of competence and thresholds at which they should be achieved, the educational leadership from the primary care departments formed a work group with the support of a Health Resources and Services Administration grant. Review of the literature led us to embark on a stepwise process for initiating a competency-based system of medical education. We established the benchmarks by a process of individual effort followed by group consensus. These benchmarks, in the aggregate, permit an evaluator to determine whether a given competency has been achieved. The next phases of step 2 required setting thresholds for the demonstration of competence and finally establishing consensus regarding the threshold for competence at each level of training for each specific benchmark. To accomplish the latter, we surveyed the program directors of the 202 accredited pediatric training programs that are members of the Association of Pediatric Program Directors. Eighty-one members (40%) completed our survey. Although some controversy existed for thresholds during the postgraduate-year-1 level, majority consensus was reached for nearly all benchmarks at the upper levels of training. Impact of the shift to competencies for medical students and practicing physicians is also reviewed. Having defined the benchmarks and thresholds for the 6 ACGME domains of competence, we are well positioned to move to step 3: developing the necessary tools to evaluate competence. The move to competency-based education impacts the entire pediatric community. Lessons learned from our experience may be generalized and thus be of value to the community at large.