Assessing language proficiency is not only an important task but also a sensitive issue. This is especially true in Taiwan and much of Asia where testing is strongly ingrained in the culture. There are several commercially produced proficiency exams available on the market today. But, these exams are costly, only offered at limited times, and may not be appropriate for the needs of some language programs. As a result, many universities are in the process of creating their own language proficiency exams. However, there are few models for educational institutions to follow when creating their own proficiency exams. This paper presents the steps a university in Taiwan followed to create an English proficiency exam with a high reliability, appropriate validity and strong correlation to the Test of English as a Foreign Language (TOEFL). This paper includes the six procedures used for developing the language exam: (1) determining the purpose of the test, (2) designing test specifications, (3) constructing test items, (4) evaluating and revising test items, (5) specifying scoring procedures, and (6) performing validity (content, construct, and concurrent) and reliability (split-half and Cronbach's alpha) studies. Finally, the paper concludes with a discussion of the changes to test specifications to better reflex changes in the English ability of current university students in Taiwan. It is hoped that this paper will serve as a model for other schools that want to create their own language proficiency exams.