A strong tradition in research in primary and secondary schools has involved student and teacher perceptions of psychological characteristics of actual or preferred classroom environment. This paper provides a foundation for the extension of this tradition to the higher education level by describing the development, validation, and use of a new instrument, the College and University Classroom Environment Inventory (CUCEI), suitable for small higher education classes often referred to as seminars. The CUCEI assesses students' or instructors' perceptions of the following seven psychosocial dimensions of actual or preferred classroom environment: personalization, involvement, student cohesiveness, satisfaction, task orientation, innovation, and individualization. Administration of the CUCEI to 372 students in 34 classes and to 20 instructors attested to the internal consistency reliability and discriminant validity of the actual and preferred forms with either the individual or the class mean as the unit of analysis, and supported the ability of the actual form to differentiate between the perceptions of students in different classrooms. A research application of the CUCEI involving associations between student outcomes and classroom environment tentatively suggested that the nature of the classroom environment affects outcomes. Another research application suggested that both students and instructors preferred a more favorable classroom environment than the one actually present, and that instructors viewed classroom environments more positively than did their students in the same classrooms. Desirable future applications of the CUCEI for research purposes and in improving teaching in higher education are considered. The first main aim of this paper is to describe the development and validation of a new instrument to assess perceptions of classroom psychosocial environment in university and college classrooms. The second major purpose is to report the first two research uses of this instrument in, respectively, a study of associations between student outcomes and classroom environment and an investigation of differences between students and instructors in their perceptions of actual and preferred classroom environment. As well, desirable future research directions involving the new instrument are suggested. Before describing the development and use of the new instrument for the higher education level, important background information about analogous work at the primary and secondary school levels is briefly reviewed in an attempt to place the new work into context.