Objective The purpose of this paper was to report tests of the validity and reliability of a new instrument, the Assessment of Quality of Life (AQoL)-8D, which was constructed to improve the evaluation of health services that have an impact upon the psychosocial aspects of the quality of life. Methods Australian and US data from a large multi-instrument comparison survey were used to conduct tests of convergent, predictive and content validity using as comparators five other multi-attribute utility (MAU) instruments? the EQ-5D, SF-6D, Health Utilities Index (HUI) 3, 15D and the Quality of Well-Being (QWB)?as well as four non-utility instruments?the SF-36 and three measures of subjective well-being (SWB). A separate three part Australian survey was used to assess test?retest reliability. Results Results indicate that AQoL-8D correlates more highly with both the SWB instruments and the psychosocial dimensions of the SF-36, and that it is similar to the other MAU instruments in terms of its convergent and predictive validity. The second Australian survey demonstrated high test?retest reliability. Conclusions The results indicate that the AQoL-8D is a reliable and valid instrument which offers an alternative to the MAU instruments presently used in economic evaluation studies, and one which is particularly suitable when psychosocial elements of health are of importance.