A system and method for diagnosing deficiencies and assessing knowledge in test responses comprises a computerized testing station for presenting a question to a responder. An initial response analyzer communicates with the testing station for determining the correctness of an initial response by the responder to the question. A necessary knowledge determiner is disposed to analyze an incorrect initial response from the initial response analyzer for detecting responder's deficiencies in past cumulative knowledge and in new subject matter knowledge. A cumulative knowledge analyzer is provided for analyzing the incorrect initial response for identifying specific deficiencies in past cumulative knowledge. A production rule analyzer is provided for analyzing the incorrect initial response for identifying specific deficiencies in new subject matter knowledge. Finally, a report generator communicates with the cumulative knowledge analyzer and the production rule analyzer for generating a written deficiency report.